It’s possible for a binding financial agreement to be overturned, with the court having the ability to overturn any agreement in place. If you have a binding financial agreement and you are about to face family court, you may be wondering if this agreement can be overturned, including in the event of a divorce or separation.
In this article, we’ll discuss what a binding financial agreement is and whether or not these can be overturned in Australian family court.
What is a binding financial agreement?
A Binding Financial Agreement (BFA) is an agreement between two parties that takes the form of a written document signed by both parties and both parties lawyers. It governs the interests of their property in the event of separation or divorce.
It’s possible to enter into a Binding Financial Agreement before starting a relationship, during its course, or after it ends. If made after the end of a relationship, the BFA must be finalised within twelve months of the divorce order or two years after the date of separation of a defacto relationship.
To formalise a binding financial agreement, each of the involved parties must seek independent legal advice about specific matters that the agreement may involve. They must also present an official certificate from their legal advisor to prove the same. A financial agreement is binding to both parties if:
- It’s presented in writing and signed by both parties.
- It includes a statement clarifying that each of the parties involved obtained independent legal advice before signing the agreement.
- The involved parties are already in a relationship or contemplating entering one.
- Each of the parties involved presents a signed statement from the legal practitioner who advised them on the advantages and disadvantages of the agreement.
- The agreement hasn’t been set aside or terminated by a court of law.
- It includes a declaration of separation.
Overturning a binding financial agreement
Involved parties can overturn a binding financial agreement in one of two ways. The first method involves creating a new agreement. It must include a provision that declares the termination of the previous financial agreement. Alternatively, they can create a termination agreement. It’s a written document stating the end of the binding financial agreement in question.
Factors that may lead to overturning a binding financial agreement
The court is authorised to set a binding financial agreement aside on determining it to be invalid. There are various reasons why this could happen, as listed in Section 90UM and Section 90K of the Family Law Act passed in 1975.
These reasons include:
- If the court determines that the agreement was made for the sole purpose of defeating or defrauding a creditor, or if it was made with reckless disregard to the interests of the creditor
- If the agreement was obtained through fraud, for instance, through failure to disclose either of the party’s liabilities or assets at the time of making the agreement
- If the court deems it impractical to carry out the BFA
- If the agreement is declared unenforceable or void in the sense of contract laws. For instance, public policy, mistakes, breach of the agreement, misinterpretation, or unconscionable conduct
- If the circumstances of one of the parties involved in the agreement have changed significantly, for instance, through hardships or the continuing care of children.
- If, after analysing all the circumstances, the court deems that it would be equitable and just to set the agreement aside
It’s possible to overturn a binding financial agreement in a family court or separation or divorce proceeding. Getting the right legal advice enables you to navigate this process in a way that is fair to you.
If you’re at the end of a relationship and have questions regarding the termination of a binding financial agreement, it is advisable to get good legal advice.
For many decades Linda Emery & Associates has worked tirelessly to help hundreds of individuals across the Central Coast understand their rights inside and outside the courtroom. We help simplify matters such as the termination of binding agreements to make it easier for our clients to understand concepts and get resolution.
Feel free to contact us today for legal advice on navigating such common issues.