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An unicorporated association is an association of individuals formed for a particular purpose, but having no distinct legal personality. According to ConservativeCentralOfficeVBurrell1982, the members of the association must have mutual obligations to one another, which suggests that there is some form of contractual relationship between them. However, not all commentators impose this additional restriction on the use of the term. Unincorporated associations often have a quasi-charitable status; that is, they persue specific objectives on behalf of beneficiaries, but these objectices are not regarded as charitable in law. For example, an association to promote the reduction of taxes for the wealthy is highly unlikely to be viewed as charitable, but it may hold and disburse funds for this purpose in exactly the same way that a charity would.
Unlike a corporation, an unincorporated association has no rights or duties separate from those undertaken by its individual members. Contrast this with, for example, a LimitedCompany, which is an corporation and has a distict legal personality. A limited company can sue and be sued in its own name, and enter into contracts.
Although an unincorporated association is not a legal entity in itself, some forms of unicorporated association are recognized in law; important examples are partnerships and TradesUnions. Such bodies have rights and responsibilities that are not effective on, for example, members of clubs and societies.
Because it is not a legal entity, individual members of an association are responsible for their actions, even if carried out on behalf of the association. However, if an association appoints a committee to act on its behalf, that committee may be jointly liable for the actions of one of its members. In addition, in legal proceedings an association may appoint someone to represent the association, and that appointment will normally be accepted by the courts.
An association cannot own land, unless it is very small, as there are limitations on the number of people who can jointly own land (see LawOfPropertyAct1925). Corporations can own land, as the corporation is a single legal entity.
If an association is able to exercise control over its membership, then it has a legal obligation to exercise this control according to the principles of natural justice (see: NaturalJustice). A breach of natural justice may be actionable in private law (e.g., breach of Contract) or, in some cases, by way of JudicialReview. However, it has to be noted that the courts are reluctant to entertain judicial review actions against associations that are not run or funded by the state.
Because of the peculiar nature of an unincorporated association, it is difficult to determine the precise legal basis under which it holds its assets. This causes problems in two ways: the effect of donations made to such associations, and the way the assets should be disbursed when the association ends.
Gifts to unincoporated associations
In principle, because it has no legal personality, gifts and donations cannot be made to unincorporated associations, nor can they be beneficiaries under a trust, nor act as trustees in their own right. And yet, bequests are routinely made to such associations, and very frequently they do manage testamentory gifts that purport to recognize them as valid trustees. Problems only arise when members of the association attempt to use the assets outside the declared purpose, and it is at that point that the lack of any solid legal foundation for properly-holding by unincorporated associations becomes evidence.
There are at least five views of how a gift made to an unincorporated association operates at law.
1. An absolute gift to its present members. On this view, the gift succeeds because any purpose attached to the gift is tacitly ignored. The members would hold the property as JointTenants or TenantsInCommon. In principle, the members of the association can do what they like with the property.
2. An absolute gift to its present members subject to contractual obligations. This is the most widespread view, and tends to be accepted by default by English courts. On this analysis, the gift is still an absolute gift to the members of the association, but the members are bound by the contractual relationship between them to use the property to the associations's purposes. If one member tried to misuse the property outside the association's purposes, the other members could seek to restrain him by injuction, or proceed against him for breach of contract.
3. An absolute gift to its present and future members (with or without contractual obligations). On this construction, the gift will fail if its not limited in perpetuity (see RuleAgainstPerpetuities).
4. Creation of a valid trust of the ReDenley1969 type_. It is highly controversial whether the Re Denley principle applies where the trustee is expressed to be an unicorporated association. Accordint to ReGrant1980 it does not. However, if Re Denley would apply if the trustee had been expressed to be some group of individual who just happened to be members of the association, it seems rather unjust that the gift should fail if express to the association as a body. Consequently, the balance of authority seems to be that there are at least some circumstances where such a gift will be recognized as creating a Re Denley trust.
5. A mandate to an officer of the association. In the same way that drawing a cheque creates a mandate (that is, an instruction) to your bank to pay money to the payee, the gift to an association can be seen as a mandate to an officer of the association to disburse the gift in a particular way. As mandates are (by definition) revocable when initially created, there must be some point at which the mandate to the association becomes irrevocable. The most logical view seems to be that this takes place when the property of the gift is disbursed.
Disbursal of assets of the dissolution of the association
A common problem concerning unincorporated associations is the distribution of their assets when they are dissolved. Where the assets are contributed by the individual members the problem is not particularly acute, but there are particular difficulties where the assets are funds that have been raised by public subscription (see ReWestSussexConstabularyWidowsFund1971). The prevailing view is that there is no obligation to return these funds to their contributors, but in AirJamaicaVCharlton1999 Lord Millet stated that such a return should be effected where the number of contributors was small and readily ascertainable.
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