Binding Financial Agreements (BFAs), commonly known as prenups or financial separation agreements, are legal documents designed to give couples clarity and certainty when it comes to managing their assets and finances in the event of separation or divorce. But what happens if one party feels the agreement was unfairly made? Can a BFA be challenged or set aside by the Court?
The answer is yes, but under extremely specific circumstances.
In this article, we’ll break down when and how a BFA can be overturned, what the law requires for it to be binding, and how James Noble Law, with offices in Toowong, North Quay (Brisbane CBD), and Robina on the Gold Coast, can help you understand your legal options.
Table of Contents
What Is a Binding Financial Agreement (BFA)?
A Binding Financial Agreement is a private contract between two people in a relationship prior to marriage, during marriage, after divorce or in a de facto, that outlines how assets, property, and financial resources will be divided if the relationship ends.
When valid, these agreements override the Court’s usual powers to make property or spousal maintenance orders. This means the Court will only intervene if there is a serious legal issue, such as fraud, duress, or non-disclosure.
Legal Requirements for a BFA to Be Binding
Under the Family Law Act 1975, particularly sections 90G and 90UJ, a BFA must meet strict legal criteria to be valid. These include:
1.The agreement must be in writing and signed by both parties.
2. Each party must receive independent legal advice from a qualified lawyer before signing.
3. The legal advice must include:
- The effect of the agreement on their rights.
- The pros and cons of signing the agreement.
4. A signed statement confirming that legal advice was given must be provided. While this statement does not need to be attached to the BFA, it must be shared with the other party or their lawyer.
5. The BFA must clearly identify the section of the Family Law Act under which it is made.
Failure to meet any of these requirements could make the agreement unenforceable.
Can the Court Set Aside a Binding Financial Agreement?
Yes-but only in specific situations. Section 90K of the Family Law Act provides a clear list of circumstances where a Court may order a BFA to be set aside.
A BFA may be overturned if:
- Fraud occurred, such as the non-disclosure of a significant asset or liability.
- A party entered an agreement to defeat or defraud creditors.
- A party acted with reckless disregard for the interests of a third party (such as a new partner or de facto spouse).
- The agreement is void, voidable, or legally unenforceable (for example, due to technical drafting issues).
- There has been a material change in circumstances affecting the welfare of a child, and enforcing the agreement would cause hardship.
- The agreement was made under duress, due to undue influence, or unconscionable conduct.
- A superannuation interest in the agreement cannot be split under the current law.
- The agreement has become impracticable to carry out, often due to significant life changes since it was signed.
The Importance of Full and Frank Disclosure
Disclosure is one of the cornerstones of a valid BFA. As highlighted in the case of Adame [2014] FCCA 42, even if the agreement itself does not list specific asset values, the parties must still disclose their financial resources and assets honestly and fully, whether in the agreement or through negotiations.
If it becomes clear that one party intentionally concealed assets, the agreement may be challenged and set aside for fraud or material non-disclosure.
Duress, Undue Influence & Unconscionable Conduct
One of the most common reasons BFAs are challenged in court is the presence of coercion or unequal bargaining power.
The High Court case of Thorne v Kennedy [2017] HCA 49 is a landmark decision in this area. It made clear that if a party is pressured into signing an agreement, especially under emotional or financial threats, the agreement may not be enforceable.
Key signs of duress or undue influence include:
- Presenting the agreement as non-negotiable
- A threat to cancel the wedding if the agreement is not signed
- Lack of time to obtain proper legal advice
- A significant financial imbalance between the parties
- Inadequate or rushed legal advice, especially close to the wedding date
The Court looks at whether a person’s free will was compromised, even if subtly. The bar is not just total coercion; it is whether the person’s ability to make a rational decision was seriously affected.
Economic Duress & Illegitimate Pressure
Economic duress, discussed in cases such as Pompidou & Pompidou [2007] FamCA 879, can also be a reason to overturn a BFA. If one party uses financial leverage or threats to force an agreement, such as withholding financial support unless the agreement is signed, the Court may view this as illegitimate pressure, invalidating the contract.
Does the BFA Have to Be Fair?
Interestingly, the law does not require a BFA to be “fair” in the traditional sense. Parties are free to make poor bargains if legal advice is provided and the agreement complies with the law.
However, if the agreement is grossly one-sided, this could be evidence of undue influence or unconscionability, especially where one party had little negotiating power. Courts are increasingly willing to consider fairness, particularly after Thorne v Kennedy, where the High Court highlighted that fairness could play a role in assessing validity.
What Should You Do If You Want to Challenge a BFA?
If you believe that a BFA was signed under duress, without proper legal advice, or involves serious non-disclosure, you should seek legal advice as soon as possible.
At James Noble Law, our team of experienced family lawyers will:
- Review your agreement in detail
- Assess whether legal requirements were met
- Investigate the surrounding circumstances
- Advise you on the strength of your case
- Help you file to set aside the agreement, if appropriate and
- Represent you through your legal journey.
We have extensive experience representing clients in Brisbane (Toowong and North Quay), the Gold Coast (Robina), and throughout Queensland.
Final Thoughts
While Binding Financial Agreements offer certainty and protection, they are not immune to scrutiny. If you were pressured into signing a BFA, did not receive proper legal advice, or believe your ex-partner concealed assets, you may have grounds to challenge the agreement in court.
But these cases are complex and highly fact specific. That is why it is vital to work with a legal team that understands both the technical requirements and the human dynamics at play.
Need Help? Get a FREE 20-Minute Consultation
If you are unsure about the validity of a BFA, or need help preparing or reviewing one, speak with one of our experienced family lawyers at James Noble Law today.
📍 Offices in:
- Toowong & North Quay (Brisbane)
- Robina (Gold Coast)
📞 Book your free, no-obligation 20-minute consultation today. Find Brisbane family lawyers on Google Maps near you.
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Your financial future matters. Do not settle for an agreement that does not serve your interests. Let James Noble Law guide you toward clarity and justice.
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