There are times when two people enter into a contract prior to marriage. They set out the rules regarding the marriage, and the consequences in the event of marriage breakdown. In the United States, such agreements are commonly known as prenuptial agreements. In Canada, they are more commonly referred to as domestic contracts or marriage contracts.
Two persons may also, either prior to or during cohabitation, enter into a cohabitation agreement. If the couple who is cohabitating later go on to get married, the cohabitation agreement they have will become a domestic contract.
The Act
As per section 52 of the Family Law Act, two people who are married already or who intend to get married may enter into an agreement agreeing on their respective rights and obligations under the marriage or separation, annulment or death.
Marriage contracts generally deal with many different marital issues, these issues include ownership in or division of property, support obligations, the right to direct the education and moral training of their children, or any other matter in the settlement of the spouses’ affairs. Marriage contracts might not generally deal with the right to custody of or access to the spouse’s children. The contract does not limit a spouse’s possessory rights in the matrimonial home.
This contract can be made prior to or during the marriage. However, in the recent years, these agreements have soared in popularity especially among spouses with a substantial fortune or assets, prior to entering into a marriage.
A contributing factor towards divorce
In the recent years, some commentators have questioned if such agreements play a crucial role in contributing towards divorce. This argument states that such prenuptial agreements actually put an expiration date on marriage or at times incentivize divorce. Others are of the opinion that effective consequences for a divorce may ultimately reduce the likelihood of getting divorced and force couples to work towards reconciliation and find a solution.
Two main reasons are generally considered for the lack of prenuptial agreements: 1) People are of the opinion that such agreements are unnecessary because they provide with a false optimism that marriage will last; 2) People are also of the opinion that the discussion of prenuptial agreements signals uncertainty about marriage.
Irrespective of this, such agreements are gaining massive popularity.
As per legal commentators and practitioners, only about 5 to 10% of the population enters into these domestic agreements. So, the question comes down to if the divorce rates are higher among married couples with such agreements in place. Unfortunately, the private nature of these agreements leads to little statistical information regarding the rate of divorce in marriages with prenuptial agreements.
Do ‘prenups’ become void?
A per the Section 56(4) of the Family Law Act, the court can set aside all or part of a domestic contract on the grounds of (1) failing to disclose significant assets, debts or liabilities at the time of contracting; (2) inability of a party to understand its nature and consequences; or (3) otherwise in accordance with the law of contracts. This section imports the doctrine of unconscionability. This doctrine focuses on the circumstances under which the contract was formed.
When it comes to provisions of domestic contracts in regard to the care and support of children, these are subject to the best interest of the child and can be set aside if they are unreasonable with regard to the Child Support Guidelines (CSG).
Clauses related to chastity in agreements that are made prior to March 1, 1986, are interpreted, as support to the recipient spouse, which end upon the recipient spouse’s marriage or cohabitation with a new partner. The court may also set aside a separation agreement that is entered into in exchange, this is done for securing the removal of religious barriers to remarriage.
If you need assistance regarding the prenuptial agreement or domestic contract, feel free to contact Prowse Chowne.