Week One - Types of Business Entities (Associations)

Question 1

What are key points under the definition of associations?

Answer 1

Not for profit organisations (e.g. charities)
A group of two or more people to pursue a lawful purpose
No distinct legal entity

Question 2

How must associations register?

Answer 2

They must register with the Australian Charities and Not for Profits Commission (ACNC)

Question 3

How are associations legally governed?

Answer 3

Associations are usually governed in accordance with the rules of a constitution

Question 4

Can associations be unincorporated, incorporated or both?

Answer 4

Associations can be both; incorporated and unincorporated

Question 5

Is a partnership an association?

Answer 5

Yes, however, a partnership is a business association with a view to profit (differs from associations which are not for profit)

Question 6

What are the key characteristics of an unincorporated association?

Answer 6

• Members are liable
• There are difficulties in accessing capital
• There is no formalities for formation
• The simplest form is a not for profit organisation

Question 7

Can/Cannot Be Done In An Unincorporated Association: Buy or Own property

Answer 7

Cannot

Question 8

Can/Cannot Be Done In An Unincorporated Association: Enter into a contract or be liable in tort

Answer 8

Cannot

Question 9

Can/Cannot Be Done In An Unincorporated Association: Be sued or sue another

Answer 9

Cannot

Question 10

Can/Cannot Be Done In An Unincorporated Association: Receive a gift or be a beneficiary to a trust

Answer 10

Cannot

Question 11

What are the mains aims of an incorporated association?

Answer 11

• Overcoming limitations of unincorporated association

* Provided by the Associations Incorporation Act 2009 (NSW)

Question 12

What does formation of an incorporated association mean?

Answer 12

• The creation of a separate legal entity
• Any action brought against the entity not its members - members cannot be held liable
• The use of incorporated next to the company name

Question 13

What are some examples of an incorporated association?

Answer 13

• Avoca Rugby Club

* Newcastle Law Society Incorporated

Question 14

What were the facts of Davies v Barnes, Webster and Sons (2011)?

Answer 14

• Mr Davies was a member of the management committee of a rugby club
• He was also the President
• The club treasurer had signed an agreement and was witnessed by Davies
• The agreement provided a working sum to a building company
• The building company served a statement and demanded 147,000 pounds for variations under the contract
• Mr Davies argued he was not personally liable

Question 15

What was the ruling in Davies v Barnes, Webster and Sons (2011)?

Answer 15

• The ordinary members of the club were not held liable

* All committee members were personally liable, but not the ordinary members of the club