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When a Binding Financial Agreement made under the Family Law Act is not binding

The Family Law Act provides that the parties to a marriage may enter into a Financial Agreement that regulates what should happen with their property on the termination of the marriage. Similar provisions apply to de facto relationships. A binding Financial Agreement ousts jurisdiction of the Court provided it is a valid agreement.

To be valid the agreement must be entered into after independent legal advice has been given by a legal practitioner, with the advice dealing with the rights of the parties and the advantages and disadvantages of the agreement. The advice must be provided prior to signing the agreement. It is also a requirement that there is a signed statement by the legal practitioner providing that the advice has been given prior to the signing of the agreement.

The question of determining whether a Financial Agreement is valid and enforceable is determined by a Court, applying the principles of law and equity that are applicable in determining the validity and enforceability in affected contracts. This means that any agreement that was obtained by unconscionable conduct or undue influence or duress is liable to be set aside.

In a recent case, where the wife had in fact received advice not to enter into the agreement, the trial judge found that the wife had no choice but to enter into the agreement and set out six reasons for that conclusion. The trial judge concluded “(i) her lack of financial equality with her husband; (ii) her lack of permanent status in Australia at the time; (iii) her reliance on her husband for all things; (iv) her emotional connectedness to their relationship and the prospect of motherhood; (v) her emotional preparation for marriage; and (vi) the “publicness” of her upcoming marriage.” Thorne v Kennedy [2017] HCA 49 (8 November 2017). So, under those circumstances, the trial judge found that the agreement should be set aside for duress and undue influence and this decision was upheld by the High Court of Australia.

Contact Rita Derek of this firm for further advice.

Posted in: Derek Legal Blog at 11 December 17

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