As Family Lawyers we are often asked about "Pre-Nups".
A Pre-Nup is known as a Binding Financial Agreement (or
"BFA") in Australia. It is an agreement made between
parties to a relationship, outside of the court process, that
dictates how their assets and liabilities will be divided if the
relationship breaks down.
A BFA allows the parties to deal with the division of their
finances by contractual means instead of going through the family
In many instances, the BFA is entered into before marriage or
before commencing a de facto relationship.
In some situations, the relationship has already broken down and
the parties utilise a BFA to decide what property each will
receive. BFA's can also be made during the relationship in
advance of any relationship problems. BFA's can be made by
married couples and defacto couples alike.
BFA's have been the subject of much discussion and debate of
late by both the public and lawyers.
Recent developments in the law have created a perception that
BFA's should not be entered into because they:
Will not stand up in court;
Are easy to disavow and "wiggle your way out of"
Cannot be drafted so as to protect the parties to the
These perceptions are misplaced. If a BFA is properly drafted,
it will be valid and offer the protection that the parties to the
BFA seek. Notwithstanding their technicalities and complexities, a
properly drafted and properly signed BFA is a cost-effective tool
to minimise the risks associated with the financial aspects of a
In order to stand up in court the parties to a BFA must:
Both sign the agreement;
Disclose all of their financial circumstances to the
Receive independent legal advice about the agreement and
Each receives a copy of the signed agreement.
Like any binding contract, BFA's are not easily disavowed
and if properly drafted, are extremely difficult to have set aside.
In fact, even BFA's with minor technical faults (such as
improper party names, misspellings, etc) have been found to be
binding. Additionally, a court will not set aside an agreement just
because it is unfair.
Many of the examples of BFA's being set aside have to do
with parties not receiving independent legal advice regarding the
agreement or being pressured unfairly to sign the agreement.
As part of our role, we ensure that both parties have the
necessary legal advice to prevent any suggestion that a party did
not understand, or were pressured into signing, the agreement.
Some of the other ways a BFA can be held to be invalid or set
When a person facing insolvency uses the agreement to defeat
the claim of a creditor;
If the agreement is unconscionable or grossly unfair or
If the agreement is the product of duress.
Because of their complexity, some lawyers refuse to draft
BFA's. At Watkins Tapsell, our Family Lawyers reject this
approach and, instead, address the complexity of BFA's with a
detailed and thorough approach to ensure that the various
requirements are met. We guarantee to our clients that our
BFA's conform to the exacting standards necessary to ensure
that they are binding.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
To print this article, all you need is to be registered on Mondaq.com.
Click to Login as an existing user or Register so you can print this article.
Sect.117 can deal with false statements and knowingly making false allegations of violence could justify a costs order.
Some comments from our readers… “The articles are extremely timely and highly applicable” “I often find critical information not available elsewhere” “As in-house counsel, Mondaq’s service is of great value”
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).