An unincorporated association is a group that does not have separate legal personality from its members. Unlike the case of a company, there is no separate body with limited liability. The members of an unincorporated association have duties and liabilities to each other that stem from the rules of the association. Sports clubs, local organisations, charitable fundraising groups or community groups very often comprise unincorporated associations.
The liability of members for any wrongdoing by other members of the group varies according to the wrongdoing that has taken place. Liability in unincorporated associations under Irish contract and tort law is summarised below.
It is not possible to contract with an unincorporated association itself. Individuals contracting on behalf of an unincorporated association may be personally liable for breaches of the relevant contract or they may be found to be acting as agents for the members, depending on the scenario. Where the rules of an unincorporated association authorise a member to sign a contract on behalf of the unincorporated association, he will sign the contract as agent on behalf of the other members and all of the members will be liable for any breach. Where the management committee has authorised a member to sign a contract as agent on behalf of the unincorporated association, the management committee itself will be liable for any breach. Where a member has signed a contract on behalf of an unincorporated association where he or she has not been authorised (by way of the rules of the association, a committee of the members or otherwise) he or she may be found personally liable for any breach of such contract. In summary, the principal of a contract signed by a member on behalf of an unincorporated association will be; the member himself; or the committee or members of the association who authorised the member to sign that contract. The principal of the contract cannot be the association itself as it does not have legal personality.
Where a governance committee such as a management committee authorises a person to enter into contracts on behalf of the association, there should be a clear agreed procedure for demonstrating that authorisation has been given (usually by way of minutes at committee meetings). Committee members absent from such meetings may not necessarily be liable as principals. It is important that unincorporated association rules set out very clearly what power the secretary, treasurer or other officers have to bind the members when entering into contracts. This is because it could be argued that members of an unincorporated association impliedly give the association’s officers authority to enter into contracts on their behalf when they sign up to the rules. It should also be noted that a member of an unincorporated association can only be found liable for breaches in respect of contracts entered into by the unincorporated association whilst he or she was a member.
The Irish Supreme Court, in 2017 delivered a judgment in the case of Hickey v McGowan (“Hickey”) which clarified the law of tortious liability for unincorporated associations, to emphasise that such liability is personal to individual members as opposed to the unincorporated association itself. Prior to this judgment, it was generally understood that members of unincorporated associations were considered jointly and severally liable for damages arising out of a tort committed by a member in pursuit of the objects of the association. However this had never been considered by the Irish courts in detail or indeed by the Irish Supreme Court. The decision in Hickey firmly established that under Irish law, members of unincorporated associations can have personal liability for tortious acts committed by another member of the association, even where they were not directly involved in that act. The judgment emphasised that the liability which arises is that of the individual members as opposed to liability on the part of the unincorporated association itself. The judgment also stated however that it is conceivable that the rules of the association may provide as to who should be liable in such instances. Hickey also clarified that tortious liability is personal on the part of each of the members of an unincorporated association at the time that the act itself was carried out and new members joining after the event do not ‘inherit’ that liability.
Whether a member of an unincorporated association can be found liable for the actions of employees of the association depends in this jurisdiction on whether he or she would be considered the employer under the “close connection” test. Generally, it is most likely that the management committee of an unincorporated association will be seen as the employer, as it will usually be in control of the association’s affairs, including employment contracts.
Limitation on Liability - Remedies and Defences
The result of the judgment in Hickey is that if an award is made in tort against members of an unincorporated association, the plaintiff is left with an award which amounts to a series of individual judgments against those who were members at the time the act was committed. The individual member found liable will not be able to limit his or her liability to the funds held by the association. Nor will he or she be entitled to an indemnity from the other members payable from the funds of the association, unless the rules expressly allow this.
Unincorporated associations that deal frequently with third parties usually try to limit their tortious and contractual liability by means of notices and exclusion clauses (for example, on admission tickets). Another essential way unincorporated associations protect themselves from such liability is through insurance, with the insurance policy issued to the committee for the time being or a particular officer as a representative of the members. If the insurance policy contains member-to-member indemnity, a member can claim on the policy if he or she becomes liable. Accordingly third parties dealing with unincorporated associations should check that the association has adequate insurance in place.