Unincorporated Associations - Soon To Have Legal Personality?

There are tens of thousands of unincorporated associations in Scotland including clubs and non-profit-making associations. The Scottish Law Commission proposes a change to the law under which such associations will be accorded separately legal personality if they satisfy certain legal conditions. Shuna Stirling considers the proposals.

The issue

Unincorporated associations are groupings such as associations, clubs and churches which have not chosen to establish themselves as companies or as some other form of incorporated body. At present an unincorporated association has no separate legal personality. This causes problems if it wishes to enter into contracts, own property or engage employees. It cannot contract in its own name - so who exactly is entering into the contract? There is a risk that office holders and sometimes even members of unincorporated associations will incur personal liability (with potentially serious financial consequences) e.g. under a contract entered into by the association, or for certain criminal offences committed by the association (e.g. health and safety), or to compensate third parties who suffer injury while using the association's premises or other facilities.

Scottish Law Commission's recommendations

Following consultation (see our previous article ), the Commission has published a report . It recommends that separate legal personality be accorded to associations which satisfy certain conditions. By attributing legal identity to such associations, the serious financial risk to office bearers and members is lessened.

The main conditions for the attribution of legal personality would be:

the association has at least two members; its objects do not include making a profit for its members; it has a constitution which contains: the association's name; its purpose; membership criteria; the procedure for the election or appointment of those managing it; the powers and duties of its office-bearers (if any); the rules for distributing its assets if it is dissolved; and the procedure for amending its constitution. An association satisfying these conditions would be known as "Scottish Association with Legal Personality", abbreviated to SALP.

The advantage of conferring legal identity on unincorporated associations is that it will give legal certainty to both the SALPs and those who have dealings with them. A SALP will have the capacity to acquire property, enter into contracts, and to sue and be sued in its own name.

...