Voluntary association

A voluntary association (also sometimes called an unincorporated association, or just an association) is a group of individuals who voluntarily enter into an agreement to form a body (or organization) to accomplish a purpose.

Strictly speaking in many jurisdictions no formalities are necessary to start an association, although it is difficult to imagine how a one person association would operate. In some jurisdictions, there is a minimum for the number of persons starting an association. Some jurisdictions require that the association register with the police or other official body to inform the public of the association's existence. This is not necessarily a tool of political control but much more a way of protecting the economy from fraud. In many such jurisdictions, only a registered association is a juristic person whose membership is not responsible for the financial acts of the association. Any group of persons may, of course, work as an association but in such case, the persons making a transaction in the name of the association are all responsible for it.

Legal status

An unincorporated association has been defined as existing:

"...where two or more persons are bound together for one or more common purposes by mutual undertakings, each having mutual duties and obligations, in an organisation which has rules identifying in whom control of the organisation and its funds is vested, and which can be joined or left at will."^[1]

In most countries, an unincorporated association does not have separate legal personality, and nor do members of the association usually enjoy limited liability. However, in some countries they are treated as having separate legal personality for tax purposes.^[2] However, because of their lack of legal personality, legacies to unincorporated associations sometimes fall foul of the general common law prohibitions against purpose trusts.

Associations that are organized for profit or financial gain are usually called partnerships.^[3] A special kind of partnership is a co-operative which is usually founded on one man—one vote principle and distributes its profits according to the amount of goods produced or bought by the member. Associations may take the form of a non-profit organization or they may be not-for-profit corporations; this does not mean that the association cannot make benefits from its activity, but all the benefits must be reinvested. Most associations have some kind of document or documents that regulate the way in which the body meets and operates. Such an instrument is often called the organization's bylaws, regulations, or agreement of association.

Civil law

In some civil law systems, an association is considered a special form of contract. In the Civil Code of Quebec this is a type of nominate contract. The association can be a body corporate, and can thus open a bank account, make contracts (rent premises, hire employees, take out an insurance policy), lodge a complaint etc. In France, conventional associations are regulated by the Waldeck-Rousseau law of July 1 1901 and are thus called Association loi 1901, except in Alsace and Moselle where the law of April 19 1908 applies (these countries were German in 1901). In Texas, state law has statutes concerning unincorporated nonprofit associations that allow unincorporated associations that meet certain criteria to operate as entities independent of their members, with the right to own property, make contracts, sue and be sued, with limited liability for their officers and members.

Australia

In most Australian states a similar set of laws allows not-for-profit associations to become legal entities with a limit to the liability of its members. An example of such a law is the South Australian 'Associations Incorporation Act 1985'([1]). This allows for the creation of a legal entity able to buy and sell land and in general enter into legally binding contracts. Many clubs and societies begin life as an unincorporated body and seek to attain incorporated status to protect its members from legal liability and in many cases to seek government financial assistance only available to an incorporated body. Clubs and Societies wishing to incorporate must meet the provisions of the relevant state act and lodge their constitution with the corresponding state government authority.

Freedom of association

The freedom of association stands in the Universal Declaration of Human Rights:

Article 20

(1) Everyone has the right to freedom of peaceful assembly and association.

(2) No one may be compelled to belong to an association.

External Link

Law relating to unincorporated associations

Footnote

^ Conservative and Unionist Central Office v Burrell (Inspector of Taxes) [1982] 1 WLR 522. The definition was for tax purposes, but was expressed to be of general application.
^ For example, in the United Kingdom an unincorporated association is assessable to corporation tax.
^ In most common law legal systems, partnership is defined by statute as "the relationship which subsists between persons carrying on a business in common with a view of profit"

[1] Conservative and Unionist Central Office v Burrell (Inspector of Taxes) [1982] 1 WLR 522. The definition was for tax purposes, but was expressed to be of general application.

[2] For example, in the United Kingdom an unincorporated association is assessable to corporation tax.

[3] In most common law legal systems, partnership is defined by statute as "the relationship which subsists between persons carrying on a business in common with a view of profit"

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