Protection through Incorporation

If not incorporated...

executive could be out of pocket...

If incorporated...

body can sue and be sued...

assets may be sold...

but members not personally liable.

If a club or group is not incorporated and an injured party wishes to take action to recover damages, it will normally sue the executive or committee of the unincorporated body, be it a club, league, association or other group, and the persons on the executive or the committee will be personally liable and may have to satisfy a court judgment out of their own pockets. The executive or committee tend to be sued because an unincorporated body itself cannot be sued. This is because it has no legal identity and at any one time consists of the members at that time. It is rarely feasible for an injured party to sue all the members of the club or group at the time of suffering injury and the courts have allowed injured persons to sue the executive or committee as representatives of the unincorporated body. In contrast, an incorporated body can sue and be sued, not the members that comprise the body. If an action against an incorporated body is successful, the incorporated body's assets will be sold to satisfy the court judgment, but the members of the body will not be personally liable. Incorporation effectively limits the liability of the members of the incorporated body to the extent of any unpaid annual subscription, which will often be nothing at all and will rarely be more than a few dollars.

Sporting clubs and community groups should, therefore take all due care for the safety of their members and players and the public attending events and functions who may enter land or premises occupied by the club or group. Further, clubs and groups should certainly protect themselves by incorporating and insuring. Whereas previously incorporation was expensive, unwieldy and onerous in the long term, it is now comparatively cheap, (initial fee $60.00, ongoing annual fee $20.00), readily available and straightforward.

The other benefits of incorporation are:

whereas, a negligent club official of an unincorporated body would be sued personally, the negligent official of an incorporated body would not be sued but rather the corporate body itself would be sued. Thus the negligent club official is protected.
whereas unincorporated bodies are unable to enter into contracts (because they have no legal entity), incorporated bodies can because they are a recognised legal entity, enter into contracts, sue and be sued. This makes dealings much more satisfactory and straightforward from both the point of view of the club and the business world.
the business world will far more readily contract with an incorporated body than with the executive or committee of an unincorporated body because the incorporated body is a legal entity that will not suddenly change 'next season' or 'next year'.
the rule of 'perpetual succession' applies, and thus contracts entered into by a corporate body are binding on the corporate body in the future even though the officers of the corporate body may change. This enables clubs to enter into long term agreements. In comparison, unincorporated associations cannot enter into agreements.