Entering into contracts

If your society is thinking about entering into a contract it should consider the following:

• Is the purpose of the contract authorised under the society’s rules and its objects?
• If money is being borrowed, do the society’s rules allow it, and will it be used for a purpose covered by the ‘objects’ of the society?
• Who is authorised to enter into the contract on behalf of the society?

The Incorporated Societies Act 1908 sets out specific requirements for a society entering into a contract.

• If the contract is the type of agreement that, when between individuals, would be in the form of a deed, then the society must have a written contract, executed ‘under seal’ (using the society’s ‘common seal’). An example of this type of contract would be an agreement to buy or sell land.
• If the contract is the type of agreement that, when between individuals, would be in writing, then the society will need a written contract signed by a person authorised by the society to do so (usually an officer). An example of this type of contract would be a loan.
• If the contract is the type of agreement that, when between individuals, would not be in writing, then the society does not need a written contract, (so long as it is entered into by a person authorised by the society to do so, usually an officer).

If your society is thinking about entering into a contract it should consider the following.

• Is the reason for the contract authorised under your society’s constitution and its purposes?
• If as part of the contract the society will be borrowing money, will that loan be used for one of the society’s purposes?
• Who is authorised to enter into the contract on behalf of the society?

The Incorporated Societies Act 2022 sets out specific requirements for societies entering into a contract.

Where an obligation is entered into by a person and is required to be by deed, it may be entered into on behalf of the society in writing signed under the name of the society by:

• 2 or more officers of the society or
• If required by the constitution, an officer or other person whose signature must be witnessed, or
• 1 or more attorneys appointed by the society.

Where an obligation is entered into by a person and is required to be in writing, it may be entered into on behalf of the society in writing by a person acting under the society’s express or implied authority.

Where an obligation is entered into by a person and is not required to be in writing, it may be entered into on behalf of the society in writing or orally by a person acting under the society’s express or implied authority.

If a society has a common seal, it may affix it to the contract or document containing the enforceable obligation.