Chua Tan Associates are experienced family lawyers who are able to advice you of your rights to challenge the validity of a financial agreement. If you wish to seek legal advice about the validity of your binding financial agreement, do not hesitate to contact us for assistance today.
How Courts decide on whether there is duress in signing financial agreements is well established in case law. If no duress is found to have been present, then the agreement can be enforceable. Ultimately, it is important for there to be no apparent lack of free will in a party’s decision to sign the agreement and for there to be no doubt that they were subjected to undue influence. You can ensure that financial agreements are free from undue influence by:
1. Having a financial agreement which is fair to both parties and represents both of their wishes.
2. Allowing both parties the opportunity to negotiate the terms of the financial agreement. This means that the agreement is offered on the basis that it can be negotiated. If you have a “take it over leave it” mentality, the other party has a greater chance of setting aside the financial agreement if they apply to the Family Court. This does not mean that the parties have to have equal bargaining power, as most relationships have an inequality of bargaining power. The relative difference in financial positions of the parties and the nature of the relationship can best be addressed by each party getting independent legal advice and there being no pressure to end the relationship or not proceed with the wedding if there was no signed financial agreement.
3. If the terms of the financial agreement give one party a “bad outcome”, it might be used to show there was undue influence or unconscionable conduct. Therefore, if one party is in a precarious financial situation and that they feel no choice but to sign the agreement, it is even more important to show that you have not taken advantage of the other party’s vulnerable position by being more accommodating by providing an outcome which is more within the range of what a Court may make for a property settlement order. In this respect, it is important to understand that if the agreement is materially unfair to one party, even if it the agreement is executed, the Court can still set it aside.
4. Whether there was any explicit or implicit threat to end the marriage or engagement. The most common is where one party threatens to call off the wedding if the financial agreement is not signed. Similarly, one extreme example of a threat is where one party threatens another that they will be reported to immigration authorities if they do not sign the binding financial agreement. This situation is more likely to occur if a prenuptial agreement is required just before a couple is to get married with most of the wedding having already been planned. Ideally, it is best to avoid signing binding financial agreements immediately before the wedding. Furthermore, financial agreements should be entered into well before wedding plans are made and well before friends and family have made plans to travel for the wedding, especially if they have travelled from overseas. Nevertheless, financial agreements can always be signed both before and after the wedding.
5. The emotional states of the parties and the emotional circumstances when entering into the financial agreement. For example, a woman in the relationship may be emotionally prepared and eager to have children and want to sign the agreement to “get it over with.” It is therefore important not to berate or pressure a party to sign the agreement, which can create the appearance of threatened or actual unlawful conduct leading to allegations of duress.
6. It is important to reduce the potential power imbalances of the parties by giving adequate notice and allowing the parties time for careful reflection to consider the terms of agreement without feeling pressure to sign it. This means that each party needs to be given the opportunity to reflect on the legal advice provided to them. If a party is not fluent in English, it is important to give them more time to have the terms of the financial agreement translated and explained to the party to protect yourself. Similarly, if a party’s literacy is poor, it is important to give more time for them to have the agreement understood. It is important to not rush the signing of the financial agreement because of an upcoming wedding date, and to allow for sufficient time well before wedding preparations are made.
If you are seeking legal advice about your family law matters, no matter what step in the process your matter is at, our friendly lawyers can help.
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