Binding Financial Agreements AKA Prenups - Beware of Unfair Advantage! 

08 JUN 2021

 

A Binding Financial Agreement is an agreement which parties may enter into at the start of their marriage or de-facto relationship. These agreements are normally created to ensure that each party retains certain property in the unfortunate event of a relationship breakdown.

Unlike Orders, these agreements are not reviewed by the Court. They merely require both parties to have obtained independent legal advice before signing the document.

Given that these agreements aren’t reviewed by the Court, there may be instances where a party signs this document without knowing the full extent of the agreement. Independent legal advice aims to reduce the likelihood of this occurring, though this does not prevent a party from willfully signing a document which has been described to them as being unfair and prejudicial towards them.

In a recent matter of Beroni & Corelli [2021], the Full Court of the Family Court dismissed a husband’s appeal relating to a revoked Binding Financial Agreement.

The timing surrounding the signing of the agreement fell months prior to the wife being granted a spouse visa. 

The agreement and her independent legal advice was provided to the wife in English. The wife was advised against signing the agreement as it was deemed to be unfair in the circumstances of the relationship. Against this advice, the wife signed the agreement.

The wife then brought an application to have the agreement set aside on the basis of duress, undue influence and unconscionable conduct on the part of the husband. It was the husband’s position that the wife entered into this agreement using her free will, which was against the advice which had been given to her.

The Court noted that, with respect to the advice given to the wife, “… the 30 minute duration of the meeting along with the wife’s lack of proficiency of English, any explanation given to the wife would have been wholly inadequate for her to understand the advantages and disadvantages of the BFA”.

The Court also stated that the wife’s choice to sign the agreement against the advice given to her may be an “indicium of undue influence”. 

The Court also heard evidence from the wife’s migration agent, who explained that the wife “did not understand much English at all”, nor was she able to read any of her visa applications and forms without formal translation.

The Court set aside the agreement for unconscionability and undue influence, as the wife did not understand the nature or effect of the agreement, nor the advice which was provided to her.

If you or anyone you know is considering entering into a Binding Financial Agreement, we strongly suggest that they obtain reliable advice so that their interests may be best protected.

Should you wish to discuss your Binding Financial Agreement with a member of our friendly team, please do not hesitate to contact our office on (02) 4626 5077.

The contents of this publication are for reference purposes only. This publication does not constitute legal advice and should not be relied upon as legal advice. Specific legal advice should always be sought separately before taking any action based on this publication.      

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