Can a BFA be Set Aside, Updated or Terminated

Binding Financial Agreement being declared invalid and set aside 

If one of the parties to a Binding Financial Agreement does not want to follow its terms, then they will either have to:

1. Reach an alternate agreement with their partner; or
2. Make an Application to the Court to set aside the Binding Financial Agreement.

If an Application is made to the Court to set aside the Binding Financial Agreement then the Court will want to know whether the:

• terms of the Binding Financial Agreement fully and completely represents the intentions of both parties when they decided what financial arrangements they would make for their relationship;

• agreement is comprehesive and can be read on its own to include all you both agreed on or whether there are other things the Court should look at such as other understandings you had between you.

 

 

The main reasons a Court might decide that a Binding Financial Agreement is not valid, should not be followed and should be set aside are:

• There has been a material change in circumstances. For example this could be the birth of a child after the Binding Financial Agreement is signed, or, it could relate to the care, welfare and development of a child of the relationship, such that a party would suffer hardship if the Binding Financial Agreement was not set aside;

• If one party signed the agreement under duress. An example of duress might be if the Binding Financial Agreement was given to a party the day before the wedding. Another example might be if a party was pressured in some way by some form of physical or emotional abuse.

• The agreement was obtained by fraud. An example of fraud could be the non disclosure of relevant material or a failure to disclose financial circumstances;

There are other reasons a Court might set aside a Binding Financial Agreement. They include:

• A party entered into the Binding Financial Agreement to defraud creditors or with reckless disregard to the interest of a creditor of the party.

• The circumstances that have arisen since the Agreement was made, make it impracticable for the Binding Financial Agreement or a part of the Binding Financial Agreement to be carried out.

• A party entered into the Binding Financial Agreement to defraud a party to the Binding Financial Agreement (or another spouse of a party to the Binding Financial Agreement in the situation of multiple relationships) with reckless disregard of the interest of that person.

• A party to the Binding Financial Agreement engaged in conduct which is unconscionable.

• The Binding Financial Agreement covers at least one superannuation interest that is unsplittable.

• A payment flag is in operation on a superannuation interest covered by the Binding Financial Agreement and it is unlikely that the payment flag will be lifted.

• The agreement is void, voidable or unenforceable.

A court will not set aside an agreement simply because it is not fair to one of the parties.

The fact that both parties must have, before they signed the agreement, each obtained their own Independent Legal Advice and obtained Certificates from the Lawyers giving them the advice, will assist in arguing against any suggestion by one party that they did not understand what they were signing or its consequences.

Changing or Updating a Binding Financial Agreement

A Binding Financial Agreement cannot be updated.

If a Binding Financial Agreement needs updating, then it must be terminated and a new Binding Financial Agreement entered into.

More Information on Binding Financial Agreements

What can you put in your Binding Financial Agreement and what do you need to discuss with your spouse first. Find out our answers in the information sheet What can you include in a Binding Financial Agreement.

The information sheet What is a Binding Financial Agreement explains the basics you should know about Binding Financial Agreements.

Can you do your Binding Financial Agreement yourself without lawyers? The answer is in our information sheet Can I prepare a Binding Financial Agreement myself.

You need to be eligible to lawfully enter into a Binding Financial Agreement for it to be valid. Find out more in our information sheet Who can enter into a Binding Financial Agreement.

The different types of Binding Financial Agreements are explained in the information sheet Types of Binding Financial Agreements & What type of BFA do I need. If you do not use the correct type of Binding Financial Agreement for your circumstances it may later be set aside by the Court and your partner will not have to follow it.

Will your Binding Financial Agreement protect your assets and income? read more in the information sheet Are Binding Financial Agreements actually Binding.

The timing as to when you do your Binding Financial Agreement may be important. This is explained in our information sheet When can you enter into a Binding Financial Agreement.

If you have already started living together, have gotten engaged, have had a baby with your partner or even got married and only later though about getting a Binding Financial Agreement you should read our information sheet Is it too late to enter into a Binding Financial Agreement.

Read about the benefits to you of having a Binding Financial Agreement in our information sheet What are the Advantages of a Binding Financial Agreement.

You can also read about any possible downside to having a Binding Financial Agreement in our information sheet What are the Disadvantages of a Binding Financial Agreement.

Our information sheet How to tell your Partner you want a Binding Financial Agreement could also be of assistance to you if you have concerns in that area.

Particularly if you have started a new relationship you should be aware of the information in our information sheet How having a Binding Financial Agreement might help your Succession Planning so you know what might happen with your Will or if you pass away.

If you are separated or divorced and need to document your property settlement agreement as to how you are dividing yoru property in a legally binding and enforceable way, then our information sheet Should I use a Binding Financial Agreement or a Consent Order will assist you.

 

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