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Ben Majoe, Special Counsel and Jordan Schweitzer, Lawyer in our Family Law team, provide an insight into Binding Financial Agreements and how they differ from our common law neighbours, the United Kingdom and the United States of America.

Binding Financial Agreement, or more commonly known as a “Prenup” or “Prenuptial Agreement”, is a private written agreement that details how a couple will divide their assets and liabilities following the breakdown of their relationship. BFAs have a poor public reputation that can best be described by the following quote from case heard in 2008:

“I did not want to sign the agreement. I did not consider that it was a positive step at the beginning of the marriage.”

Despite the misgivings towards Binding Financial Agreements (BFAs), they can nonetheless be a practical step in managing the property of a relationship. According to the Australian Bureau of Statistics, despite 113,815 marriages being registered in 2019, there were also 49,116 divorces with the median length of a marriage being 12.2 years and separation occurring after only a median of 8.5 years.

Further, given that the overwhelming majority of post-separation property disputes are resolved by agreement before reaching trial (approximately 92% of all property cases), and of those cases that didn’t settle having to wait a median time of 2 years, 15 weeks to get to trial, a BFA can offer an appealing means of avoiding the courts altogether.

So, how do Australia’s BFA laws stack up to our common law neighbours, the United Kingdom and the United States of America, and do couples in these countries have the same reasons to be hesitant of entering into a BFA?


In Australia, both de facto and married couples can enter into a BFA at any time during their relationship, notwithstanding the BFA’s colloquial name of “prenuptial” suggesting otherwise.

The UK and the USA, on the other hand, have taken a similar approach towards BFAs for married and non-married couples. In both countries, a BFA is known as a “Prenuptial Agreement” and, as the name suggests, is only available to married or engaged couples. Such agreements are similar to an Australian BFA in terms of subject matter that it can cover, including division of property.

These Prenuptial Agreements are not available to non-married couples in the UK and USA, however. Instead, such couples can enter into “Cohabitation Agreements”. Despite being a different agreement, they also allow non-married couples to take matters into their own hands by stating how their property is to be divided upon separation in a manner similar to a Prenuptial Agreement or a BFA.


A key aspect of a BFA that appears to be a prevalent cause of hesitation when considering a BFA is that they can be favourable only to one party.

In Australia, there is no requirement that a BFA be fair, nor that it be “just and equitable” like a traditional property settlement. The reason for this was stated succinctly in the case of Fewster & Drake:

“… subject to compliance with the statutory requirements, people are free to enter such binding financial agreements as they see fit.”

A similar approach is taken in the USA where there is also no requirement for a Prenuptial Agreement to be fair to both parties.

However, the position is the opposite in the UK. Unlike Australia and the USA, there is no Act governing Prenuptial Agreements in the UK so all authority for the rules and requirements of these agreements come from previous cases. In once such case, the UK Supreme Court affirmed the principle “the court should give effect to a nuptial agreement that is freely entered … unless in the circumstances … it would not be fair to hold the parties to their agreement.”


Notwithstanding the court’s comments in Fewster & Drake (above), BFAs must be entered into freely by the parties on an informed basis. This necessarily requires the parties to openly disclose their financial circumstances.

This requirement is enshrined in legislation in Australia which states that non-disclosure of a material matter may be grounds for setting aside the BFA on the basis of fraud.

Similar requirements are in place in the USA and UK, and like in Australia a lack of disclosure can be grounds for setting a BFA aside in both jurisdictions.


Despite there being no express requirement for a BFA to be fair under the Australian law, there is also no requirement in Australia for parties to sign a BFA if it only favours one side. As such, recent court decisions have begun questioning why parties may have agreed to a one-sided or “bad bargain” BFA, and whether this agreement is the result of undue influence or other unconscionable means.

The leading case on this point is Thorne v Kennedy in which Ms Thorne moved to Australia to live with Mr Kennedy with whom she had commenced a relationship. Shortly thereafter, the two became engaged and approximately one month before the wedding was to take place, Mr Kennedy had a BFA drafted. Ms Thorne ultimately signed a BFA which contained terms such that if the relationship ended, she would “have nothing. No job, no visa, no home, no place, no community.” Although this gross inequity of the BFA was not a deciding factor in itself, the court reasoned that agreements of a grossly unreasonable nature could be an indicator of undue influence. Ultimately, the BFA was set aside in this case.

BFAs are likely to remain a polarising means of distributing property between parties following the breakdown of their relationship.

Australian BFA laws attempt to thread the needle between allowing parties the freedom to reach an agreement on their own terms, while still being available to all couples regardless of their marital status. An Australian BFA is more widely available to couples than an UK Prenuptial Agreement, and the courts are taking steps towards questioning the unfairness that may go unchallenged in a USA Prenuptial Agreement.

Our team is highly skilled and experienced in advising on all aspects of Family Law. Contact us today if you need advice or representation in this area.

*The information provided in this website serves as a general guide and does not constitute legal advice. It is based on our research and experience at the time of publication. Please consult our knowledgeable legal team for any specific inquiries or advice relevant to your circumstances, as the content may not have been updated subsequently.  

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