What is a Financial Agreement?
A financial agreement (also known as a Binding Financial Agreement) is a written agreement or contract between two parties that sets out how the parties would like to divide their financial resources if the relationship comes an end or has ended.
Under the Family Law Act, you can enter into a financial agreement either before, during or after your relationship has ended.
When you enter into agreement before moving in together or getting married – this is known as a prenuptial agreement. This agreement sets out a plan of what should happen if things don’t work out.
Sometimes couples during a relationship may feel insecure about a perceived threat to their assets, so a financial agreement is used to provide certainty that assets are protected from future claims.
In the case of a separation, a financial agreement can be used to provide finality to your financial relationship.
In some cases, financial agreements can be overturned. An example of this is if one party claims to have been signing the agreement under duress.
What is duress?
Duress occurs when one party feels they have signed a legally binding document against their free will, having been forced to do so under an unlawful act or threat.
“There have been cases when a financial agreement has been signed off and then one party comes back to says they were forced into signing the document. This then makes the document void and has to go to court,” says lawyer Caroline McKenzie from Caroline McKenzie Legal.
Breaking the agreement
The court may terminate a financial agreement based on duress if the outcome of the behaviour meets the technical requirements of those particular legal remedies.
“It’s important to know that once the papers are signed, the agreement is technically final. Changing your mind or feeling that you got an unfair deal won’t be sufficient enough to break the agreement,” Caroline said.
“It can be difficult to prove that some kind of duress, pressure or unjustifiable influence, or a substantial change in circumstances took place in order to convince a court to reconsider the terms of a financial agreement,” Caroline added.
A financial agreement can only be terminated if there is proof that the duress caused when signing the agreement involved threats or actual illegal behaviour. It’s also important to know that duress must have occurred at the time of signing of the agreement and can’t be linked to any past events that may have caused prior pressure.
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