At Strafurd York Legal, we often work with clients who are creating financial agreements, expecting these documents to be fully enforceable and binding. This is particularly relevant in family law contexts. However, it’s common for both legal professionals and the involved parties, especially spouses, to approach these agreements with caution. The main concern is the possibility of these agreements being later considered non-binding. This raises important questions: What makes a financial agreement legally binding, and under what conditions are they enforceable? Our Family Law experts at Strafford York Legal explore these critical issues in detail.
Determining the Binding Nature of Financial Agreements
The Family Law Act stipulates specific conditions under which a financial agreement is considered binding on the parties involved. For married couples, these conditions are outlined in section 90G(1) of the Act, while de facto couples must adhere to the requirements of section 90UJ(1).
Essential Requirement of Independent Legal Advice
One of the critical requirements for a financial agreement to be binding, as stated in sections 90G(1)(b) and 90UJ(1)(b), is that each spouse party must receive independent legal advice. This advice, provided by an Australian Legal Practitioner, should cover:
- The impact of the agreement on that party’s rights.
- The potential benefits and drawbacks of entering into the agreement, at the time the advice was given.
Legal Advice for Third Parties in Financial Agreements
While it’s wise for third parties involved in a financial agreement to seek independent legal advice, the law does not mandate this for non-spouse parties.
Proving the Binding Nature of a Financial Agreement
The responsibility to demonstrate that a financial agreement is binding lies with the party relying on it. This involves producing a statement signed by the other party’s solicitor, typically referred to as the s 90G Statement for married couples or the s 90UJ Statement for de facto couples.
Quality of Legal Advice: A Critical Factor
Merely obtaining a lawyer’s signature on a statement is not sufficient. The agreement may be deemed non-binding if the quality of the advice is questionable, or if the advice provided does not genuinely pertain to the financial agreement. It’s crucial that any advice given under sections 90G or 90UJ is substantial, meaningful, and well-documented.
Key Considerations in Obtaining Legal Advice
When seeking legal advice, it’s important to ensure:
- The advice is independent for each party.
- Legal practitioners should not recommend specific lawyers for the other party.
- A record of the advice provided should be maintained.
- The advice should be given without the presence of the other financial agreement party, ensuring independence.
- The advice must come from a competent legal practitioner.
Potential to Salvage a Non-Compliant Financial Agreement
Sections 90G(1A) and 90UJ(1A) of the Family Law Act offer a remedy if a financial agreement doesn’t initially meet the binding criteria, provided the court finds it unjust and unfair not to enforce the agreement.
Conclusion
For a financial agreement to be binding, it must:
- Be signed by all parties.
- Involve each spouse party receiving independent legal advice before signing.
- Include a signed statement from the legal practitioner affirming the advice given.
- Ensure exchange of these statements between the spouse parties.
- Remain unterminated and not set aside by a court.
At Strafurd York Legal, we specialise in drafting and advising on financial agreements. Please note that this information is for educational purposes and does not constitute legal advice.
