An unincorporated association is a collective of people with common goals who have chosen to formalise their relationship, but without incorporating as a company or similar legal entity.
[1] Unincorporated associations are cheap and easy to form, requiring a bare minimum of formalities to bring them into existence.
In the leading case, Conservative and Unionist Central Office v Burrell, Lord Justice Lawton defined an unincorporated association as: [T]wo or more persons bound together for one or more common purposes, not being business purposes, by mutual undertakings, each having mutual duties and obligations, in an organisation which has rules which identify in whom control of it and its funds rests and upon what terms and which can be joined or left at will.
[3] The essential elements are thus (i) that there exist members of the association; (ii) that there is a contract binding them inter se (i.e., among themselves, to the exclusion of outsiders); (iii) that they have a common purpose which is not business; and that (iv) there must have been a moment in time when a number of persons came together to form the association[4] (although those persons need not be the present members).
If, say, the group of people wants to enter into a contract to hire a football pitch (with the right to use it and the duty to pay for it), then the association cannot do this but must appoint someone (usually one or more of the members) to act on their behalf.
The membership is the sovereign body in the organisation, as it is from their consent to enter into the contract inter se that the association exists at all.
If a sports centre hires a pitch to "Smalltown Soccer Stars", and the fees go unpaid, the agreement may be unenforceable.
In short, the legal underpinning is at odds with how people actually think and behave, and judges (and occasionally Parliament) have at various times tried to square the law with the social reality.
Whilst an unincorporated association cannot hold property itself, in the strict legal sense, there are mechanisms that are used to achieve the same effect.
It is difficult to imagine, however, that this construction would be correctly applied in the case of a philanthropic society, where construing the gift as one to the members would contradict its stated purpose.
[17] The third alternative is that members hold the property as beneficial owners, but are bound by their contracts inter se as to their ability to take out their share.
[15] The holding may then either be considered absolute, or on trust for the membership as a whole, but it is the role of contract in each case to determine the rights of members, including the officers, to apply the money.
[18] One statement of when such an absolute gift will be considered to have been made was given in Re Lipinski's Will Trusts: Where the donee association is itself the beneficiary of the prescribed purpose ... the gift should be construed as an absolute one ... the more so where, if the purpose is carried out, the members can by appropriate action vest the resulting property in themselves, for here the trustees and the beneficiaries are the same persons.Another statement of the principle came in Hanchett‐Stamford v Attorney‐General [2008] EWHC 330 (Ch), where Lewison J stated: the property of an unincorporated association is the property of its members, but that they are contractually precluded from severing their share except in accordance with the rules of the association ... this kind of collective ownership must, in my judgment, be a sub-species of joint tenancy, albeit taking effect subject to any contractual restrictions applicable as between members.
[21] Sometimes the situation is clear: monies paid pursuant to a contract, such as raffle tickets and members' subscriptions, are normally taken to fall inside the third (contract-holding) category.
[21]Simon Gardner has argued that the principle behind such a conclusion is that the ticket purchaser was not at liberty to choose to transfer the money to be held on a purpose trust.
In particular, he suggests that an employer's obligation to pay into a pension pot, as occurred in Davis v Richards and Wallington, for example, might fall into this category.
If not, a term can be implied as to the arrangements, as happened, for example, in Re Bucks Constabulary Widows and Orphans Fund Friendly Society (No 2).
[27] This approach was not taken in Davis v Richards and Wallington where Scott J did not discuss implied terms directly when holding that the rights were now bona vacantia.
Instead, he says, judges should pursue a set of implied terms that differ according to the nature of the society (social club or pension fund, for example).
[28] Lewison J's ruling in Hanchett Stamford's case would appear to have decided this question for the time being: he held that the assets do not become bona vacantia as long as one member of the association remains.
When by death or otherwise only one member of the association remains, there is no longer any contractual restriction on her ownership, and she becomes absolutely entitled per the general law of joint tenancy.
[29] In the United States, an unincorporated nonprofit association is "an informal group of two or more individuals who join together for a not-for-profit purpose without creating a corporation, LLC, or other entity to do so".
These states include California, Alabama, Arkansas, Colorado, Washington DC, Hawaii, Idaho, Illinois, Iowa, Kentucky, Louisiana, Nevada, North Carolina, Pennsylvania, Texas, Wisconsin, and Wyoming.