By Nicholas Kyriakoudes
5 minute read
When can a BFA be made ?
A Binding Financial Agreement (BFA) is a written agreement which can be made between a married couple or a couple in a de facto relationship. BFA’s stipulate how property between parties is to be divided in the event of a relationship breakdown. BFA’s can be entered into at various stages of a relationship under the Family Law Act 1975 (Cth):
- Section 90B – before marriage
- Section 90UB – before de facto relationship
- Section 90C – during marriage (prior to separation)
- Section 90UC – during de facto relationship
- Section 90C – during marriage but after separation (before divorce)
- Section 90UD – after the breakdown of the de facto relationship
- Section 90D – after divorce
If a valid BFA is made, this will have the effect of ousting the jurisdiction of the court in the matters which are agreed upon within the BFA. This means that you and your partner will not have to attend court for matters concerning the division of property included in your BFA, saving time and money, if your relationship eventually breaks down and you each seek separation or divorce. However, the court will still have jurisdiction to hear and determine the validity, effect and enforcement of the BFA itself according to contractual and equitable principles (under s 90KA FLA) and matters relating to children which cannot be included in a BFA.
What are the requirements to make a valid BFA?
A BFA is essentially:
- A financial agreement made under the Family Law Act 1975 .
- Which is made Binding by fulfilling the requirements of s 90G(1)/90UJ(1).
A financial agreement needs to be made. The financial agreement needs to be:
- Signed by the parties to the relationship.
- Identify what section of the FLA it is made pursuant to (depending on when the agreement is entered into, eg; before, during, or after marriage).
- The spouse parties cannot be spouse parties to other financial agreements.
To be a Binding financial agreement, the requirements of s 90G(1)(marriage) or 90UJ(1) (de facto) need to be satisfied, that is that:
(a) The agreement is signed by all parties
(b) Each spouse before signing the agreement, was provided with independent legal advice about the effects of the agreement on their rights, the advantages and disadvantages of the agreement.
(c) Either before or after signing, each spouse was provided with a signed statement by the legal practitioner stating the advice in (b) was provided
(ca) A copy of the statement is provided to the other spouse party or their legal practitioner
(d) The agreement has not been terminated or set aside by a court.
Can a BFA be “cured” if it isn’t made correctly?
The above requirements are strict, and failure to satisfy one or more of the statutory requirements will result in a non-binding financial agreement. This means the BFA will not be valid and the parties can be taken to court, even for the property which is dealt with in the agreement.
However, defects may be “cured” under s 90G(1A)/90UJ(1) where:
- The agreement is signed by all parties
- One or more of s 1(b),(c), and/or (ca) is not satisfied.
- It is unjust and inequitable if the agreement was not binding
- The court makes an order under s (1B) – that the BFA is binding
- The agreement has not been terminated or set aside by a court.
A BFA may be set aside for grounds set out in FLA (s 90K) such as fraud, where it is void or unenforceable, impractical, unconscionable, or where there has been a change in circumstances which warrants setting aside the agreement.
If you or your spouse are interested in making a BFA or would like to learn more about BFAs, please contact our Family Law team.