As more and more people enter into Pre-marital Agreements, the Court system is becoming increasingly prepared to attach weight to such agreements when determining division of assets on any eventual divorce.
The potential for Pre-marital Agreements to become binding has moved a step closure after the Law Commission recommended a new enforceable “Qualifying Nuptial Agreement”. The government’s response to this is still being awaited. At present, such Agreements are not automatically enforceable in Courts in England and Wales.
However, Judges appear to be more prepared to attach weight to such Nuptial Agreements as one of the relevant circumstances to be taken into account when exercising its discretion on division of assets on divorce.
At present, the law relating to such Agreements has been made clear in Case Law which states that for an Agreement to carry full weight both parties must enter into it of their own free will without pressure and be fully aware of its implications.
This was made clear in a very famous case called Radmacher and Granatino in 2010. The Supreme Court in this case advanced the proposition that “The Court should give effect to a Nuptial Agreement that is freely entered into by each party with a full appreciation of its implications unless in the circumstances prevailing it would not be fair to hold the parties to their agreement”.
The main problem which arises in reality is that sometimes there can be a clash between what an Agreement makes provision for and what the Court might consider to be fair.
Two very well known family cases White & White and Miller & Miller established that the overriding factor to be considered in financial case on divorce is that of fairness. Clearly the Court does still need to retain flexibility when deciding what is fair in a particular case and whether it would be unfair to hold parties to an Agreement depends on the facts of each individual case.
The Law Commission in February 2015 recommended that “Qualifying Nuptial Agreements” be introduced as enforceable Contracts which would enable couples to make binding arrangements for the financial consequences of divorce or dissolution of a civil partnership.
The Law Commission has recommended a number of requirements which would have to be met before the Qualifying Nuptial Agreement could be an enforceable Contract which would enable couples to make legally binding arrangements for any eventual divorce or dissolution.
The Law Commission has recommended that the following requirements be met:
- The Agreement must not have been made within the 28days immediately before the date of the wedding; and
- Both parties to the Agreement must have received, at the time of the making of the Agreement, disclosure of material information about the other parties’ financial situation. At present, this disclosure often takes the form of Schedules attached to the end of an Agreement setting out what each party has in terms of capital, property etc.
- Both parties must have received independent legal advice at the time of the Agreement.
- The Agreement must be what is called contractually valid and be able to withstand challenge on the basis of undue influence or misrepresentation.
- The Agreement must be in the form of a Deed and must contain a statement signed by both parties that they understand that the Agreement is a Qualifying Nuptial Agreement that will partially remove the Court’s discretion when making Financial Orders upon divorce or dissolution of civil partnership.
At the moment it is not clear when the Law Commissions recommendation will become law. At present, most family law practitioners already draft and negotiate Nuptial Agreements on the basis of the criteria set out by the Law Commission.
Provided the outcome for both parties would be “fair” then any Agreement prepared now has a good chance of being upheld.
For advice or assistance please contact Louise Scott.