Post-Marital and Post-Separation Agreements

The nature and effect of the agreements

Post-marital and post-separation agreements, similarly to pre-nuptial agreements, are entered into by the parties with intention to regulate their finances following a divorce or separation. The two types of agreements are broadly similar in nature, recognisance by the courts and enforcement.

Post-marital agreement

The nature and enforceability

Post-marital agreements as the name suggests are agreements made after a marriage has taken place. Those are made by the parties themselves and are seeking to regulate the spouses’ financial liability towards one another following breakdown of the relationship.

Post-marital agreements are a relatively new category of agreements recognised by the courts. Currently, they are not widely used but are expected to grow in their application.  

In practice those types of agreements are still rare and therefore there are not many cases dealing with their application. However, one of the important authorities is the case of McLeod v McLeod [2009] 1 FLR 641 considered by the Privy Council. As such it has no binding authority upon UK courts but is considered as very persuasive.

In that case, the Privy Council held that such agreements could be valid and enforceable provided that they have been entered into in good faith. Further, the case establishes authority for factors to be taken into account when the courts are considering the effect of an agreement.

What factors are considered prior to the agreement being upheld?

Firstly, it is important to emphasise that those agreements would be looked at in a similar manner to other contractual arrangements.

In considering whether such agreement would be upheld, the courts would look at all the current circumstances. As one of the main factors, the courts consider whether there has been a material change since the preparation of that agreement. If they find that there has been a significant change, it is then considered whether it could render the financial arrangements between the parties manifestly unjust.

Further, the courts take into account considerations similar to the ones established for pre-nuptial agreements. This includes whether such was agreed voluntary or under duress or other pressure for example through the dominance of one party due to mental disability of the other. The courts are mindful of the independence of the parties when entering the agreement. Of further importance would also be the opportunity to receive legal advice, whether such was sought and in some situations the extent and correctness of the advice.

The effect of post-marital agreement

The courts do take those types of agreements into account when considering ancillary relief orders and distribution of the family’s assets in general. Full weight can be give to such an agreement or no weight at all depending on the circumstances.

It is important to emphasise that the courts are not bound by such agreements between the parties, even though essentially they constitute a valid contract.

Further, it has been established that those agreements are subject to the courts power of variation under section 35 of the Matrimonial Causes Act 1973.

Post-separation agreements

The nature of post-separation agreements

Another type of agreements available to the parties of a marriage in dealing with financial provisions and distribution of the family assets are post-separation agreements. They have also developed significantly in recent years.

This type of agreement allows the parties to at least attempt to regulate the financial consequences for them on divorce or separation following the separation taking place. Therefore, those are most commonly used by parties who after the separation have remained on good terms.

What factors are considered?

The factors considered by the courts in determining the effect of such an agreement are broadly similar to the ones for post-marital agreements. Firstly, it is established that courts dealing with this type of agreements look at all the circumstances of the case. It has been established that factors such as the conduct of both parties prior to the agreement would be taken to account when the courts are considering validity. Further, of importance would be any subsequent conduct and the consequences of such.

Relevant circumstances that would be taken into account are undue pressure, exploitation of a dominant position, inadequate knowledge, bad legal advice or an unforeseen change of circumstances.

Further, it is established that formal agreements of this kind, properly and fairly arrived at, should not be displaced unless there are good and substantial grounds for believing that an injustice will otherwise be done.  Therefore, it could be seen that the courts have taken a more lenient approach towards upholding those agreements in comparison with both pre-nuptial and post-marital agreements.

What is the effect?

Where the parties reach a separation agreement and subsequently apply for ancillary relief, the court will consider the circumstances in which the agreement was formed. If it is viewed that such was fairly reached, then the court will hold it as one of the most important factors which is highly persuasive. Nevertheless, the existence of such an agreement, even if reached in fairness, would not be binding upon the courts.