New South Wales Consolidated Acts

ASSOCIATIONS INCORPORATION ACT 1984 - SECT 33

33 Liability of person executing pre-incorporation contract

(1) Where a non-existent incorporated association purports to enter into a contract and:

(a) the association is not incorporated within a reasonable time after the contract is purported to be entered into, or

(b) the association is incorporated within such a reasonable time but does not ratify the contract within a reasonable time after the association is incorporated,

the other party or each of the other parties to the contract may, subject to subsections (3) and (6), recover from the person or any one or more of the persons who purported to execute the contract on behalf of the non-existent incorporated association an amount of damages equivalent to the amount of damages for which that party could have obtained a judgment against the incorporated association if:

(c) where the association has not been incorporated as referred to in paragraph (a)-the association had been incorporated and had ratified the contract as provided by section 32, or

(d) where the association has been incorporated as referred to in paragraph (b)-the incorporated association had ratified the contract as provided by section 32,

and the contract had been discharged by reason of a breach of the contract constituted by the refusal or failure of the incorporated association to perform any obligation under the contract.

(2) Where proceedings are brought to recover damages under subsection (1) in relation to a contract purported to be entered into by a non-existent incorporated association and the association has been incorporated, the court in which the proceedings are brought may, if it thinks it just and equitable to do so, make either or both of the following orders:

(a) an order directing the incorporated association to transfer or pay to any party to the contract who is named in the order, any property, or an amount not exceeding the value of any benefit, received by the incorporated association as a result of the contract,

(b) an order that the incorporated association pay the whole or a specified portion of any damages that, in those proceedings, the defendant has been, or is, found liable to pay.

(3) Where, in proceedings to recover damages under subsection (1) in relation to a contract purported to be entered into by a non-existent incorporated association the court in which the proceedings are brought makes an order under subsection (2) (a), the court may refuse to award any damages in the proceedings or may award an amount of damages that is less than the amount that the court would have awarded if the order had not been made.

(4) Where:

(a) a non-existent incorporated association purports to enter into a contract,

(b) the association is incorporated and ratifies the contract as provided by section 32,

(c) the contract is discharged by a breach of the contract constituted by a refusal or failure of the incorporated association to perform all or any of its obligations under the contract, and

(d) the other party or any one or more of the other parties to the contract brings or bring proceedings against the incorporated association for damages for breach of the contract,

the court in which the proceedings are brought may, subject to subsection (6), if it thinks it just and equitable to do so, order the person or any one or more of the persons who purported to execute the contract on behalf of the incorporated association to pay to the person or persons by whom the proceedings are brought the whole or a specified portion of any damages that the incorporated association has been, or is, found liable to pay to the person or persons by whom the proceedings are brought.

(5) Where a person purports, whether alone or together with another person or other persons, to execute a contract on behalf of a non-existent incorporated association, the other party to the contract, or any of the other parties to the contract, may, by writing signed by that party, consent to the first-mentioned person being exempted from any liability in relation to the contract.

(6) Where a person has, as provided by subsection (5), consented to the exemption of another person from liability in relation to a contract that the other person purported to execute on behalf of a non-existent incorporated association:

(a) notwithstanding subsection (1), that first-mentioned person is not entitled to recover damages from that other person in relation to that contract, and

(b) a court shall not, in proceedings under subsection (4), order that other person to pay to the first-mentioned person any damages, or any proportion of the damages, that the incorporated association has been, or may be, found liable to pay to that first-mentioned person.