Dissolution of Unincorporated Association - Distribution of Surplus Assets - Contractual Entitlement

4 important questions on Dissolution of Unincorporated Association - Distribution of Surplus Assets - Contractual Entitlement

Advantage of Contract Holding Theory

The consequences of dissolution are much easier to explain and understand: The assets belong to the members at the time of the dissolution according to their contractual rights under the rule of the association.

Re Horley Town Football Club [2006]

If no such provision is made, a term will be implied into the rules so that the surplus is distributed equally between the members at the time of the dissolution.

Hanchett-Stamford v Attorney General [2008]

Facts: An UA procures to ban the use of performing animals. The membership eventually dwindled into two and when one of them died, there were substantial assets.

Held: Since one of the association's purposes was to seek a change in law, its purposes were not exclusively charitable and so the surplus funds could not apply cy-pres.

Held: The association was held to have dissolved on the death of the member. The assets available for the association's purposes belonged to the members beneficially subject to their contractual rights.
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Difference between when association is functioning and that is dissolved

Whilst the association was functioning, the members were precluded from severing their interests, but, on dissolution, the contractual restrictions fell away and those who were members at the time of the dissolution were entitled to the assets.

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