You’ve gone through the time, effort, and cost of preparing a Binding Financial Agreement (BFA) – but is it actually binding? Many people believe that once they sign a BFA, they’re protected from future disputes over property, finances, or spousal maintenance. But as numerous court cases have shown, that’s not always the case.
At James Noble Law in Toowong, we’ve seen how improperly executed BFAs can be overturned-sometimes years after they’re made. In this article, we’ll explore the most common reasons BFAs fail and what you can do to ensure yours holds up under scrutiny. Whether you’re entering into a relationship, already married, or separating, this is essential information that could protect your financial future.
Table of Contents
What Makes a Binding Financial Agreement Legally Binding?
To be enforceable under the Family Law Act 1975, a BFA must strictly comply with a set of legal requirements. If any of these conditions are not met, the agreement may be deemed invalid and set aside by the Court.
Let’s break down the key elements that make or break a BFA.
Receiving Adequate and Independent Legal Advice
One of the most critical components of a valid BFA is that both parties must receive independent legal advice before signing. That advice must cover:
- The effect of the agreement on the party’s rights. Including what would happen under normal Australian Family Law if the agreement didn’t exist or was set aside by a Court; and
- Whether entering the agreement is in the party’s best interests.
Case Example: Hoult & Hoult [2013] FamCAFC 109
In this case, the parties entered into a Financial Agreement before marrying. However, the Court ruled it was not binding because the wife’s solicitor:
- Failed to provide written legal advice; and
- Did not keep a written record of the verbal advice provided.
This highlights that simply signing a certificate of advice isn’t enough. A detailed written record is crucial.
Full and Frank Disclosure of Assets
Before entering into a BFA, both parties must fully disclose all assets, liabilities, and financial resources. Non-disclosure can be grounds for the Court to set the agreement aside due to fraud or misrepresentation.
Case Example: Adame & Adame [2014] FCCA 42
The husband in this case failed to disclose:
- Real estate holdings in the United States
- Various undisclosed bank accounts
As a result, the agreement was declared invalid due to misrepresentation and lack of disclosure. Honesty and transparency is crucial when it comes to BFAs.
Choosing the Right Type of Agreement Under the Correct Law
The Family Law Act contains different sections for different relationship stages. Signing under the wrong section can invalidate your BFA.
- Section 90B – For couples contemplating marriage
- Section 90C – For couples already married
- Section 90D – For couples after divorce
- Section 90UB/UC/UD – For de facto relationships
Case Example: Sullivan & Sullivan [2011] FamCA 752
This couple signed a section 90B agreement four days after they got married. Since this section only applies to pre-marriage agreements, the Court held the BFA was invalid. It should have been a section 90C agreement instead.
This technical oversight cost the couple dearly, proving how important correct legal classification is.
Material Changes in Circumstances
Even a properly executed BFA can be challenged if there is a significant change in one party’s circumstances-particularly where children are involved.
Case Example: Guild & Stasiuk [2020] FamCA 348
The couple signed a BFA before marriage, but later, the wife became the primary caregiver of their children-a change not anticipated in the agreement. The Court ruled in her favour, stating that:
“A material change in circumstances relating to the care of a child can justify setting aside a BFA.”
This case shows that flexibility is essential, and regular reviews of your agreement may be necessary as your family grows or life changes.
How Can You Ensure Your BFA Is Enforceable?
At James Noble Law, located in Toowong, Brisbane, we regularly advise clients on how to safeguard their Binding Financial Agreements. Here’s how we help ensure your agreement is rock-solid:
- Provide comprehensive and independent legal advice
- Record all legal advice in writing
- Ensure proper asset disclosure through verified documentation
- Draft the BFA under the correct section of the Family Law Act
- Advise you on potential risks, including future family circumstances
- Offer periodic reviews of your agreement
Conclusion: Don’t Assume Your BFA Is Secure-Verify It
A Binding Financial Agreement is a powerful tool-but only if it’s done correctly. Even small technical errors or omissions can result in your agreement being overturned, exposing you to significant financial risk.
If you’re unsure whether your existing BFA is enforceable-or you’re looking to draft a new one-book a free 20-minute consultation with our expert team at James Noble Law in Toowong. We’ll review your situation and ensure your legal interests are fully protected.
Contact Us
James Noble Law
📍 Level 3, 54 Jephson Street, Toowong QLD 4066
📞 (07) 2112 3947
Have questions or need legal support? Get in touch with our experienced team – we’re here to help.
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