1.3 SOLE TRADERS
The simplest form of Business structure is the sole trader. The meaning of a sole trader: a single person undertaking a business activity or enterprise for profit.
The Features of a Sole Trader:
∙Limited life
∙Limited access to finance
∙Unlimited Liability
Formation: is simple and inexpensive and may require compliance with the following:
∙Section 5 - Business Names Act 1962
∙ABN : Australian Business Number under the GST Legislation
1.4 ASSOCIATIONS
People in our society come together in associations for many and varied reasons. An association is a body of two or more persons coming together in an organization to promote either social or economic goals or interests. Associations may or may not include carrying on business with a view to making a profit. Economic goals clearly involve profit-motivated undertaking, while social goals include many things ranging from cultural, scientific, political, religious sporting and recreational endeavours. Associations historically have been both incorporated and unincorporated. Until the
C18th favoured groups and associations were incorporated or given corporate status at the prerogative of the crown. In the late C18th and early C19th legislation was introduced to prohibit certain associations for fear that these groups would disturb the peace. It was in those times that it became accepted that people had freedom to associate.
While many groups formed into unincorporated associations their legal status was in limbo, because while they were not unlawful they were not legally recognised. In short they had no legal status. It was difficult to use the legal system against the associations and at the same time the associations could not assert or exercise their rights within the legal system. The common law position of unincorporated associations has changed very little since their initial development, save for imposing some risk on their officers.Associations can also incorporate by registration under various legislative provisions, including the Associations Incorporation Act 1981 (Vic) and other state equivalents.
Associations may also register as Non-profit, that is, charitable Companies under Sect 150 (Company limited by guarantee) of the Corporations Act 2001. A partnership (or
firm) by contrast, is also an unincorporated association but under the definition in the Partnership Act 1958 is set up to make a profit.
Unincorporated Associations
Definition of Unincorporated Association:
There are a number of definitions of associations that can equally apply to incorporated as well as unincorporated associations. The Vic Associations Incorporation Act 1981 Sect 3 defines "association" as association, society, club, institution or body formed or carried on for any lawful purpose and having not less than 5 members. There are more expansive definitions in the equivalent state legislation, which add the following, "but not for pecuniary gain to its members". You can consult Sievers, Associations Legislation in Australia and New Zealand for further discussion on definitions. There are also common law definitions and these can be found in Wise Vs Perpetual Trustees Ltd [1903] AC 139, which defines a club. Lawton L J in Conservative Central Office V Burrell [1982] 2 All ER 1 defined Unincorporated association as, two or more persons bound together for one or more common purposes, not being business purposes, by mutual undertakings, each having mutual duties and undertakings, in an organization which has rules which identify in whom control of it and its funds rests and on what terms and which can be joined or left at will. The bond of union between the members of an unincorporated association has to be contractual.
The HC in Cameron V Hogan [1934] 51 CLR 358 defined an unincorporated association as follows;
"they are for the most part bodies of persons who have combined to further some common end or interest which is social, sporting, political, scientific, religious, artistic or humanitarian in character or otherwise stand apart from private gain or material advantage".
The Legal Status of Unincorporated Associations:
Unincorporated associations have no legal status, they are legal non-entities, which means these associations have no separate legal existence in the eyes of the law. They do not exist separately in law from their members, so on the formation of an association or a club, it does not have an independent existence.
Note: a number of cases relevant to Associations can be found in Chapter 9 of Latimer and other general business texts.
Activity M1-RA 1
