Tuesday, June 6, 2023

When prenups** will fail – part I

View Legal blog – When prenups** will fail – part I by Matthew Burgess

A number of previous posts have highlighted court decisions where prenups (or binding financial agreements) have been held to be invalid.

While the range of situations that might lead to this type of arrangement being declared are not enforceable, six of the main examples are set out below (next week’s post will list another seven):
  1. The relevant legislative provisions are not followed – the laws in relation to binding financial agreements are very particular. If each aspect is not followed, then there is a real risk that the document will not be binding.
  2. Failure to get independent advice – one of the key characteristics of the provisions is that each spouse must obtain independent legal advice. A failure to do so (or failure to receive specialist advice) can mean the agreement will be void.
  3. Unconscionable conduct – this normally arises where it can be shown that one spouse has taken advantage of the other, in circumstances where that other spouse was in a weak position.
  4. Abandonment or revocation by conduct – over time, the parties may start to consider themselves not to be bound by the arrangement, and even enter into inconsistent arrangements. If this occurs, then the original agreement is likely to be ignored.
  5. Undue influence – this can arise in a range of circumstances and does not necessarily require that a spouse be completely overborne.
  6. Duress – if one spouse can demonstrate that they effectively felt that they had no alternative but to sign the document, then a case of duress can be substantiated.
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** For the trainspotters, the title of today's post is riffed from the Prince song 'Illusion, Coma, Pimp & Circumstance'.

Listen here: