Unincorporated associations are not regarded as legal entities by law even though their members may regard them as independent organisations. They are really only a collection of people acting together. This is the most obvious difference between unincorporated and incorporated organisations.
Members of an unincorporated association are, subject to the powers of the association's constitution, capable of entering into contracts and doing things on behalf of other people in the association. They are also individually and personally responsible for any debts incurred in the name of the association. Where a contract is signed on behalf of an unincorporated association, the individual members are responsible and may be sued. Similarly, if someone is injured through an unincorporated association's negligence and there is no insurance, the association cannot be sued but individual members may be sued. For the importance of insurance for community organisations, whether unincorporated or incorporated, SEE INSURANCE.
As an unincorporated association has no legal identity, it cannot hold assets in its own name. It must appoint individuals as trustees, who own the assets but hold them for the benefit of the association. The trustees are bound by the Trustee Act 1936.
Many community organisations rely on grants to operate. It is a requirement of many funding programs that the organisation seeking funding must be incorporated.
It is an offence punishable by a fine of up to $5000 for a person falsely to represent that a body is an incorporated association under the Associations Incorporation Act 1985 in order to gain an advantage for herself or himself or any other person [s 60].