The law does not recognise an organisation as having any legal existence in its own name unless it is incorporated by law.
If an association is not incorporated, legal rights and obligations can fall onto individual members.
There is no legal necessity for a sport or recreation organisation to become incorporated if it remains a voluntary association. Remaining unincorporated, however, does leave the organisation in a difficult situation in regard to the law.
Example: Legal difficulties for an unincorporated association
Peckham v Moore (1975) 1 NSWLR 353.
A former footballer took proceedings seeking compensation for an injury that occurred at training. His initial proceedings were taken against the football club, which was an unincorporated body, however, the court found that the club had no legal identity. The player reformulated his proceedings and took action against the individuals of the committee with whom he had contracted three years before the injury took place. As in many organisations, this committee had changed and a new committee was in place. The court eventually decided that the player should seek compensation through the committee that was in office at the time of injury.
Not-for-profit sport and recreation organisations generally incorporate under state legislation known as the Associations Incorporation Act, 1981.
CLICK HERE for a PDF copy of this legislation. (its 109 pages so be patient)
Administrators can also contact the Office of Fair Trading, which handles this legislation.
Why incorporate the organisation?
Creation of a separate legal entity for the organisation through incorporation usually protects individuals within an organisation, provided the organisation operates within acceptable business and community standards.
With the organisation having a legal existence, it:
- Exists as a separate legal entity, regardless of changes of membership.
- May enter into contracts.
- May own land and other property.
- Can sue and be sued in its own right.
- Can accept gifts and bequests.
- May borrow money.
Regardless of whether a sport or recreation organisation wishes to incorporate, it usually abides by rules that stipulate the way in which the organisation is governed. When members join a sport or recreation organisation they generally subscribe to a constitution and a set of by-laws. Unincorporated sport and recreation organisations may encounter difficulties in formulating legal proceedings.