University of Western Sydney Law Review
Entering into a prenuptial agreement has long been an option for couples in the United States and uniform legislation was introduced in 1983 (the Uniform Premarital Agreement Act). It has, however, only recently been legislated for in Australia, under section 90B of the Family Law Reform Act 2000 (‘Reform Act’). Since it is still ‘early days’ it is timely to ask whether Australia has been able to learn from the experience of the USA, or whether it is at risk of repeating the same mistakes.
The question is important, as US experience has shown that prenuptial agreements are not always to the benefit of both parties. The dangers for women are particularly acute. They stem from the inequalities in bargaining power that exist between women and men when entering into agreements, particularly in the context of intimate relationships characterised by love and trust. This means that women who enter prenuptial agreements may be vulnerable when they are later enforced, both at the individual level and systemically. Fehlberg and Smyth have submitted that prenuptial 'agreements risk further entrenchment of the well-documented economic disadvantages typically experienced by women on divorce and their dependent children' .
The challenge for the law in the face of this social reality, has been formulated by Parkinson; namely, to 'strike the right balance between freedom of contract and the protection of people who may be in a position of vulnerability'.
This article assesses the Australian reform in the light of the dangers revealed by the experience of the USA. It begins with a very brief overview of the development of the laws regarding prenuptial contracts in the USA and Australia in the context of the general shift towards privatisation in both jurisdictions. The next section outlines some of the dangers for women of this towards freedom to contract. More detailed critical comparison of the two bodies of law is then provided, focusing specifically on issues at the point of entry into an agreement and at the point of enforcement of an agreement. I conclude that while the law in Australia has achieved a better balance in Parkinson’s terms than the law in the USA, it still does not provide sufficient safeguards for women and their dependent children. Therefore, the introduction of greater legal protections upon entry into agreements and broader scope for the court to assess agreements upon enforcement is justified. Specific proposals towards this end are made.
In the USA, prenuptial agreements were historically not enforced on the grounds that they undermined the sanctity of the institution of marriage by contemplating divorce, and in order to 'protect the legally incapacitated married woman'. Such contracts have, however, been recognised at common law in some states since the 1970 decision of the Florida Supreme Court in Posner v Posner. This shift continues the privatisation process, which arguably began with the introduction of no-fault divorce. No-fault divorce allows the couple to define what they consider to be a (un)satisfactory marriage.
In 1983 the Uniform Premarital Agreement Act (‘UPAA’) was promulgated and has since been adopted by 25 states and the District of Colombia (all or in part). Atwood notes that 'support for the Act may be building'. Whilst not all states have adopted the UPAA, all US states allow enforcement of prenuptial agreements 'at least in some circumstances'.
In those states that have not adopted the UPAA, prenuptial agreements are governed by the common law. Katz writes that a 'special body of law has developed to test the validity of antenuptial contracts', focussing on procedural and substantive fairness.
Procedural fairness usually necessitates that entry into an agreement is voluntary and full disclosure of financial information is made. All states require that agreements were entered into voluntarily, however some states have moved away from the requirement of full disclosure. For example, the statute in Florida does not require disclosure. In Stregack v Moldofsky the Supreme Court stated that '[n]ondisclosure, whether fraudulent or not, is precisely what the legislature intended to eliminate from consideration on the validity of antenuptial agreements'.
Depending on the state, other relevant considerations may include whether each party understood the legal effect of the agreement, opportunity to get independent legal advice and timing of the signing of the agreement. Ohio is an example of a state that considers the opportunity to get legal advice to be relevant. In Fletcher v Fletcher the court stated that 'when an antenuptial agreement provides disproportionately less than the party would have received under an equitable distribution, the party financially disadvantaged must have a meaningful opportunity to consult with counsel'.
The approaches to substantive fairness taken by the various state courts may be characterised as 'divergent'. Some states strictly assess substantive fairness, both at the time of execution and enforcement. Others place more emphasis on 'the parties’ freedom to contract', by only assessing fairness at the time of execution.
Pennsylvania has gone further and does not require substantive fairness whatsoever. In Simeone v Simeone the Supreme Court held that 'the reasonableness of a prenuptial bargain is not a proper subject for judicial review'. This prenuptial agreement was drafted by the husband’s attorney, who presented it to the wife on the eve of their wedding. She signed without legal advice. The fact that she signed the agreement was held to be evidence that she viewed it to be reasonable.
Overall, despite the divergent approaches of states not governed by the UPAA, recent US literature has concluded that 'state courts appear to be enforcing the majority of antenuptial agreements'.
Under the UPAA, enforcement may only be avoided if a party can show either that they did not enter the agreement voluntarily : section 6(a)(1); alternatively, that at the time of execution the agreement was unconscionable plus full disclosure of property or financial obligations was not made: section 6(a)(2). Therefore, both procedural and substantive unfairness is required for an agreement to be set aside. It is important to note that the UPAA focuses almost exclusively on the time of execution, 'eliminating almost all inquiries into the impact of the agreement at the time of enforcement'.
The use of prenuptial agreements in the USA has continued to increase. Marston details that usage tripled between 1978 and 1988 and 'has been steadily, even spectacularly, increasing' since. Approximately 50,000 couples sign an agreement each year, which is about 5% of all couples marrying. There is 'anecdotal evidence' of the stereotypical couple who enters into an agreement, described by Brod as 'an older, wealthy man marrying a younger, impecunious woman'. An example is Kahn v Kahn where a wealthy 63-year-old businessman entered into a prenuptial agreement with his 26-year-old bride to be (a waitress) on the eve of their wedding.
Similarly to the USA, prenuptial agreements that provided for separation were also considered contrary to public policy in Australia: Hyman v Hyman. As Hyland writes, 'agreements were considered prejudicial to the continuation and sanctity of the marriage, as they may result in the parties not seriously working at their relationship'.
Social views in relation to marriage have changed greatly. No-fault divorce, for example, has been introduced. Emphasis on ‘alternative dispute resolution’ under the Family Law Act 1975 (Cth) means that 38% of those who divorce make arrangements 'without direct court involvement', that is, without court orders or registering formal agreements. Prenuptial agreements represent a further step towards couples’ control over the financial implications of divorce.
The Family Court gave limited recognition to prenuptial agreements at common law, provided the parties acted in accordance with the terms of the agreement. Prior to the Reform Act, the three part test for assessing the relevance of a prenuptial agreement involved the court examining 'the circumstances in which it was entered', the 'content' of the agreement and 'the extent to which its terms have been carried out' by the parties.
This test was applied in G & G, a case decided just months before the Reform Act was passed. In G & G, a prenuptial agreement was entered into two days prior to the wedding, with the wife under the impression that the marriage would not go ahead unless she signed the agreement. It was found that the wife did not voluntarily enter the agreement, the parties 'paid no regard to the agreement' for the nine years of marriage and circumstances had changed such that enforcement of the terms of the agreement would not be 'just and equitable'. Therefore the agreement was not enforced.
In 1987 the Australian Law Reform Commission recommended that couples should be allowed to enter into prenuptial agreements. The Matrimonial Property Report suggested that there was public support for spouses to have greater certainty, particularly in two circumstances – where there is a ‘vast disparity’ in assets, or a business or farm that had been in the family for generations.
Provisions for couples to enter into binding financial agreements were introduced by the Reform Act. Part VIIIA of the Family Law Act allows couples to enter into a financial agreement before marriage under s90B, during marriage under s90C and after dissolution of marriage under s90D. Focussing on the provision for prenuptial agreements, under section 90B, a prenuptial agreement must be made in writing when ‘contemplating entering into a marriage’: s90B (a). The parties may contract about how ‘property or financial resources’ are to be dealt with ‘in the event of breakdown of the marriage’, under s90B (2) (a). Agreements may also make maintenance provisions: s90B (2) (b) and include ancillary matters (such as child support): s90B (3).
Section 90G sets out the criteria for making an agreement binding. It must be in writing and signed by both parties (a). Each party must certify that they obtained independent legal advice. They must attach a certificate signed by a legal practitioner stating that advice was given (parts b and c). One party retains the original and another receives a copy of the agreement (e) and it cannot have been set aside or terminated by a court (d). There is no provision for registration of agreements.
A binding agreement ousts the jurisdiction of the Family Court in the event of marriage dissolution with respect to property dealt with by the agreement. Part VIII of the Family Law Act (headed Property, Spousal Maintenance and Maintenance Agreements) does not apply to financial matters (a) or resources (b) to which a binding financial agreement applies: s71A. This is the first time that married couples have been allowed to oust the jurisdiction of the Family Court’s unfettered discretion to alter property interests under s79: Mallet v Mallet. This places married couples in the position that de facto couples have long been in.
There is a dearth of research regarding the use of prenuptial agreements. The research that is available regarding the use of prenuptial agreements comes from the AIFS ‘Australian Divorce Transitions Project’. This survey conducted among divorced people in 1997 (before the Reform Act was passed) found that only 2% of respondents had prenuptial agreements. They 'were not distinguishable on the basis of any shared characteristics [for example, wealth] from the sample as a whole'.
It is not known exactly how many couples have made prenuptial agreements since the introduction of the Reform Act, however, Fehlberg and Smyth’s survey conducted among the legal profession does provide some 'tentative' evidence that there has been an increase in interest, 'with enquiries in most cases increasing from in the range of two or three per year to four to six per year'.  There was a 'clear pattern' observed with regard to those interested in entering into a prenuptial agreement. The authors write that the use of prenuptial agreements is
more likely in relationships characterised by one or more of the following: a significant asset disparity between the parties (the richer party seeking to have a pre-nuptial agreement); a second marriage for one or both parties; previous Family Court involvement for one or both parties; and the presence of a family asset or business that one party wishes to quarantine.
The legal developments in the USA and Australia demonstrate a significant shift towards fostering freedom of the affianced to enter into contractual relations. To fully explore the balance achieved between ‘freedom of contract’ and ‘protection of vulnerable parties’ in Parkinson’s terms, it is necessary to consider briefly why women may be vulnerable. There are three main reasons: inequalities in bargaining power, inadequate background entitlements and the ‘feminisation of poverty’.
There are systemic inequalities in bargaining power between men and women stemming from social and economic inequalities. There are a number of manifestations of this, worst of which is when there is violence between the parties.
Firstly, desire to ensure the marriage occurs reduces a woman’s bargaining power. It may make rejecting a prenuptial agreement outright very difficult if the woman doing so believes that it will result in her fiancé not proceeding with the wedding.
Secondly, there may be a disparity in economic power. Overall, women earn less than men of similar age and are more likely than men to work part time. In 2001, 43.6% of all females employed were part-time workers, compared to 13.4% of men. Neave points out that, additionally, women often 'lack accurate information about their partners’ earning capacity or assets'.
Thirdly, there may be an age disparity, with a younger woman marrying an older man. Brod has clearly highlighted this issue in the US context. She writes '[t]here is empirical data that suggest that couples entering into premarital contracts are likely to be remarrying and are likely to be entering into age discrepant marriages'. Brod also states that this works to the disadvantage of women. There is not the same empirical data available in Australia, however family law practitioners have already expressed more concern about prenuptial agreements involving young women marrying for the first time, than older women marrying for the second time.
Prenuptial agreements allow parties to oust the jurisdiction of the Family Court in dividing assets upon divorce under section 79. Thus in making prenuptial agreements, parties ‘bargain in shadow of the law’. So the question arises -- what type of shadow is cast? Parashar has observed that due to the discretionary system, 'there is no sure way of determining one’s rights or entitlements'. A key problem for women is the undervaluing of non-financial contributions.
It is a difficult exercise to place a monetary value on non-financial contributions and then compare them to financial contributions, yet this is required under section 79. Both the courts and society regard non-financial contributions (for example, domestic work and child rearing) as 'intrinsically' inferior to financial contributions, despite statements to the contrary.
A wife’s performance of domestic work and child rearing frees her husband to maximise his career opportunities and earning capacity. In B & B (No. 2) the Court recognised that the wife had contributed to her husband’s earning capacity during the marriage, which is certainly a step forward from prior cases. Despite this rhetorical recognition, however, it is submitted that non-financial contributions are consistently undervalued and in some cases ignored. This is supported by empirical findings by the Australian Institute of Family Studies that non-financial contributions are 'unlikely to be reflected in the share of property received'.
Against this background, it is unlikely that parties will value non-financial contributions when drafting prenuptial agreements. Agreements may override the limited legal provisions that recognise non-financial contributions, such that instead of being undervalued, they are completely ignored.
If an agreement is unfair due to inequalities in bargaining power and inadequate background entitlements, the results will be realised upon divorce. This is when women and their dependent children are most vulnerable. When the post-divorce financial living standards of men and women are traced over time, women suffer greater rates of poverty, whilst men’s living standards generally improve. This ‘feminisation of poverty’ was first documented in the mid-1980s by Weitzman in the USA and the Australian Institute of Family Studies in Australia. More recently, the paths of divorcing couples have been traced by the ‘Australian Divorce Transitions Project’ conducted by the AIFS in 1997. This confirmed that the research findings from the mid-1980s still largely hold.
The ‘feminisation of poverty’ has been recognised by the Family Court, who In Marriage of Mitchell said 'Australia has a body of research indicating that mothers who are the primary carers of dependent children... suffer financial deprivation which is exacerbated by marriage breakdown' .
Prenuptial agreements have the potential to 'further entrench' the ‘feminisation of poverty’ upon divorce.
In comparing the law in these two jurisdictions it is important to assess any dangers for women at the two critical points of entry into a prenuptial agreement and enforcement.
In the USA, legal advice is not required upon entry into a prenuptial contracting either at common law or under the UPAA. Marston writes that 'no state makes consultation with independent counsel a prerequisite for the enforcement of prenuptial agreements'. The UPAA does not require any knowledge of the legal rights a party is waiving by entering an agreement. However, legal advice is a relevant consideration in some states, for example, as evidence of voluntariness or knowledge upon entering the agreement. In New Jersey, in Orgler v Orgler the husband’s attorney did arrange another attorney to give independent advice to the wife, however, she met the attorney one hour before the agreement was signed. He had not made full disclosure and she misunderstood the effect of the agreement. Therefore the court upheld the trial court’s decision that the agreement was unenforceable.
In contrast, independent legal advice is compulsory for an agreement to be binding in Australia: s90G (b), which is a huge step forward compared to the US law. The legal advice required is thorough and must include:
|(i)||the effect of the agreement on the rights of the party|
|(ii)||whether or not, at the time when the advice was provided, it was to the advantage, financially or otherwise, of that party to make the agreement|
|(iii)||whether it was prudent for the party to enter the agreement|
|(iv)||whether in light of reasonably foreseeable circumstances the provisions were fair and reasonable (emphasis added)|
Fehlberg and Smyth’s research into the first year of operation of the Reform Act revealed that under this provision, family lawyers try to 'reality test agreements' eg. asking hypothetical questions. This has proved difficult for some couples, in the words of one practitioner --'leading to abandonment of the agreement, and sometimes of the relationship'.
The provision for compulsory independent legal advice has exposed family law practitioners to the potential for professional negligence claims, to a greater degree than their US counterparts. Insurance may not cover advice given under s90G (b) if it is construed as ‘financial’ rather than ‘legal’ advice. This has already led some family law practitioners in Victoria to refuse to draft prenuptial agreements.
On balance, I consider that it is far better to legislate compulsory legal advice and risk professional negligence claims against solicitors as has been done in Australia, than to leave parties unprotected as they are in the USA. This is supported by a number of US commentators who have recommended that independent legal advice be a requirement in the USA, for example Bix and Brod. Indeed Marston goes so far as to argue that compulsory legal advice increases 'the potential for prenuptials to be a positive, relationship-enhancing experience'.
Unfortunately, it must be recognised that legal advice is unlikely to completely overcome dangers stemming from inequalities in bargaining power between men and women. In intimate relationships, characterised by love and trust for the person one is contracting with, legal advice against entry into an agreement is particularly unlikely to deter women from proceeding. The High Court in Louth v Diprose recognised that 'infatuation' can lead to vulnerability (in the context of a male giving a house as a gift). Therefore whilst compulsory independent legal advice is an improvement over the situation in the USA, it is not enough.
Registration and court approval of agreements would be an additional safeguard that may protect 'vulnerable parties'. This is supported by Zelig and the recommendations of the Hambly Report in 1987 (which were never adopted). Until December 2000 couples could enter into maintenance agreements under section 87 of the Family Law Act which were registered with the court. In relation to these agreements, Neave has argued that court registration provided 'more apparent than real' protection for women. Therefore Fehlberg and Smyth’s proposal that agreements should be registered and 'approved by the court as ‘proper’' is desirable. Further, the court should have the power to later 'revoke its approval' in some instances in the same way approval used to be revoked under s87 (8). This may seem paternalistic. Such paternalism is, however, warranted due to the inequalities in bargaining power between men and women generally. This recommendation may also have the additional benefit of reducing the chance of professional negligence claims against solicitors, by transferring some of the burden to the court.
A further safeguard may be adopted from law and economics scholarship - that is, a ‘cooling off period’. This is part of Zelig’s model for mandatory prenuptial agreements. A one month period would be practical to implement in Australia, given that couples must already give one month’s notice of their intention to marry. Whilst it should be recognised that a ‘cooling off’ period to allow re-examination of the terms of the agreement may be of limited usefulness for many couples in the lead-up to their wedding, it is still improvement over the present law. This prevents the danger revealed by the US experience of agreements being presented a very short time before the wedding with the threat that the wedding will have to be cancelled if the agreement is not signed.
The combination of independent legal advice, court registration and approval of agreements and a ‘cooling off’ period would result in women in Australia being far better protected upon entry into a prenuptial agreement than women in most states in the USA.
Parties may appeal to the court to escape enforcement of a prenuptial agreement upon marriage dissolution, although many will not be in a position to litigate, so the provisions will not assist them. The court may review conditions either upon entry into an agreement, or upon enforcement. Of course much will depend on judicial interpretation of the new Australian provisions, which has not taken place as yet. Parkinson has considered how the courts might interpret some of the provisions and his article will inform this analysis.
(a) The relevance of conditions upon entry
The UPAA places greater emphasis on conditions under which the agreement was entered, than conditions upon enforcement. However, as mentioned above, under section 6 'neither unconscionability nor nondisclosure is sufficient to void a prenuptial agreement', which is quite restrictive. The corollary is that some unconscionable agreements are enforced.
In contrast, in Australia under s90K (1) (e) unconscionable conduct at the time the agreement was entered is enough of itself to have an agreement set aside. The case of Louth v Diprose reveals an example of how this might apply in the context of an intimate relationship. Mr Diprose was held to have a ‘special disadvantage’ because he was 'infatuated' with the Ms Louth. She was held to have manipulated him into giving her a large sum of money to purchase a house. The High Court upheld the trial judge’s finding that the resulting transaction was unconscionable.
An agreement obtained by fraud (which might include non-disclosure of a material matter) is also sufficient for the court to set aside or terminate the agreement: s90K (1) (a). Previous cases in relation to section 87 agreements have considered the extent of any non-disclosure of assets and whether there was any deception involved, leading Parkinson to suggest that it might be relevant to ask 'whether the matter was ‘material’ to the other person’s consent'. This provision does prevent the situation in Florida, where nondisclosure is irrelevant to the court’s assessment of the agreement.
The court may determine that the agreement is ‘void, voidable or unenforceable’ under s90K (1) (b). Parkinson argues that three specific doctrines may be relevant under this provision - undue influence, unilateral mistake and estoppel. These will be considered in turn.
Firstly, under the doctrine of ‘undue influence’, there is no presumption of 'a relationship of dependence, trust and confidence' between husbands and wives. Older case law suggests that such a presumption arises between a fiancé and fiancée, however more recently, in Louth v Diprose Brennan J stated that '[i]t may no longer be right to presume that a substantial gift made by a woman to her fiancé has been procured by undue influence'. Specific evidence may be adduced to establish that such a relationship in fact exists between husband and wife. Parkinson has suggested that undue influence could well be extended to the factual situation of a prenuptial agreement presented to a fiancé for the first time when the 'wedding is imminent' and they are told that they have to sign it, or cancel the wedding. Cancelling a wedding at short notice is assumed to cause 'severe embarrassment', leaving a very short time to negotiate terms and considerable pressure. Parkinson argues that this is likely to satisfy a finding of ‘actual undue influence’ due to 'unconscionable pressure to sign the agreement'. The agreement would therefore be voidable, whereas Parkinson argues that the same result would be less likely under US law. A good example of this is In re Yannalfo, in which an agreement presented on the eve of the wedding was upheld. The court found that there would need to be 'additional circumstances coupled with the timing' for a finding of duress or undue influence, such as lack of disclosure.
An Australian illustration is G & G, where the wife did not want to sign a prenuptial agreement, but she did want the relationship (which had been ongoing for 13 years) 'formalised' by marriage. The husband said words to the effect of 'I am not going to marry you unless you sign it' and she relented and signed the agreement two days before the wedding. Therefore just as this agreement was set aside under the law prior to the Reform Act, such conditions might also render a prenuptial agreement unenforceable under s90K (1) (b).
Secondly, Parkinson submits that the doctrine of ‘unilateral mistake’ may operate if, for example, the written prenuptial agreement did not reflect the parties’ oral agreement. The respondent must have known of the mistake. The Family Court has made it clear in the context of consent orders that one party must have ‘knowingly taken advantage’ of the other party’s mistaken belief for a finding of ‘miscarriage of justice’ under section 79A(1) (a) of the Family Law Act. ‘Miscarriage of justice’ is a broader ground, so it remains to be seen if this approach will be taken in relation to prenuptial agreements under section s90K (1) (b).
Thirdly, estoppel may operate if, for example, one party says when presenting the prenuptial agreement that 'this is just because my lawyers want it or my business partners want it but it means nothing, I won’t enforce it'. This may give rise to an action in estoppel if the other party relies on this statement to their detriment. Prior to the Reform Act being passed, the Full Court of the Family Court were asked to consider the doctrine of estoppel in relation to agreements between the parties to a marriage that were not registered or approved by the court. The court held that the doctrine could not be used in a way that would oust the jurisdiction of the court to make orders under sections 74, 79 or 85A of the Family Law Act. Once more, it remains to be seen how the doctrine might apply now that parties can oust the jurisdiction of the court by entering into a binding prenuptial agreement.
It has been observed that the criteria under the UPAA are more restrictive than the law governing general contracts. In contrast, courts in Australia may also use principles of law and equity in determining if a binding financial agreement is valid, enforceable or effective: s90KA. There is some cross over with s90K (1), such that applications for undue influence, unilateral mistake, estoppel and unconscionability could be brought under both provisions. Some additional doctrines that Watts suggests might be relevant under s90KA in some circumstances are 'fraudulent, negligent and innocent misrepresentation; duress;....rectification; breach of fiduciary duty; collateral contract and damages'. However, consideration of how all of these might be applied in the context of prenuptial agreements is beyond the scope of this article.
Fehlberg and Smyth have speculated that the provision mandating independent legal advice may prevent use of the doctrines which consider conditions upon entry into an agreement. As discussed, it is doubtful whether legal advice will overcome power imbalances, however it may 'nevertheless suffice to make the agreement enforceable'. In this respect, the approach taken in G & G (prior to the Reform Act) is preferable. In that case, even though the parties had obtained legal advice, other conditions upon entry into the agreement meant that it was not enforced.
(b) The relevance of conditions upon enforcement
Numerous commentators have expressed concern about the long duration of prenuptial agreements, compared to other contracts. Many changes may occur during years of marriage which impact on the fairness of an agreement entered prior to marriage. Perry gives the following examples – 'the birth of children, geographical moves, changes in employment, illness, receipt of gifts or inheritances, or a return to school to change or improve one’s career'. These changes often involve women making career sacrifices, to raise children, for example. Realistically, couples are unlikely to update their agreements each time such a change in circumstances occurs, due to 'inertia'.
Even if couples do want to change their own agreements, this is difficult in both the USA and Australia. Under section 5 of the UPAA, an agreement can only be ‘amended or revoked’ by written agreement signed by both of the parties. In Australia, to exit a binding agreement, the parties must make a written ‘termination agreement’:s90J (1) (b). Agreements cannot be varied, therefore to change a term parties must make a ‘termination agreement’, then enter into a new agreement. Legal advice under s90G (b) (above) is necessary for both a binding ‘termination agreement’ and entering into a new agreement, which is expensive.
The US experience has shown that it is women who are more likely to challenge the enforceability of agreements and who are most at risk of suffering from unfairness upon enforcement of a prenuptial agreement. Specifically in relation to the UPAA, of the 18 cases brought up to 1992, 15 were challenges by women. Brod writes that '[w]omen may suffer significant harm from premarital agreements that preclude the sharing of property because, generally, women are less wealthy than men'. This is evidenced by statistics which show that it is more often women who have been economically dependent on their husband during marriage who challenge enforcement of agreements upon divorce.
In Australia, section 90K (1) potentially allows further scope for consideration of conditions at the time of enforcement than the US law. Section (c) allows an agreement to be set aside if circumstances have arisen that make it impractical to carry out all or part of the agreement. So if, for example, one party was seriously disabled during the marriage, this provision might operate.
If there has been a material change in circumstances since the making of the agreement and as a result a child or their carer will suffer hardship if the court does not set the agreement aside, section 90K (1) (d) may operate. This does allow for some unforeseen changes in circumstances to be taken account of, for example, the birth of children. It is also in line with public opinion, assessed prior to the Reform Act by an Australian Institute of Family Studies survey. The survey found that 76% of respondents 'considered that a pre-marital agreement should be alterable due to the needs of children'.
This may be contrasted with the statement made by the Supreme Court of Pennsylvania in Simeone v Simeone that:
Certainly, the possibilities of illness, birth of children, reliance upon a spouse, career change, financial gain or loss, and numerous other events that can occur in the course of a marriage cannot be regarded as unforeseeable. If parties choose not to address such matters in their prenuptial agreements, they must be regarded as having contracted to bear the risk of events that alter the value of their bargains.
As in the USA, the law in Australia does not directly provide for any inquiry into unconscionability at the time of enforcement. This has been a 'major' source of 'criticism' levelled at the UPAA. The Australian law also fails to provide scope for the court to assess substantive fairness of the terms of prenuptial agreements. It is therefore not clear that the Reform Act overcomes the potential dangers for women in the long term, arising from the enforcement of prenuptial agreements. Brod has persuasively argued that by not taking into account the consequences for women of enforcing a prenuptial agreement, the law discriminates against women as a group.
In order to substantially reduce this risk and better overcome risks stemming from changes in circumstances, it is imperative to introduce court assessment of the substantive fairness of agreements upon enforcement. This is done in Arizona, for example, in relation to agreements for spousal maintenance. In Williams v. Williams it was held that agreements 'must be fair and equitable in their procurement and in their result'.
US academic commentators Brod and Atwood have theorised models that could help to define a standard of substantive review for adoption in Australia. Both models begin with requirements for procedural fairness, which the law in Australia conforms with (better than the law in the USA). In Australia, parties are required to make full disclosure of financial information, entry into an agreement has to be voluntary (otherwise the doctrines of duress or undue influence may operate) and parties must obtain independent legal advice.
On the question of substantive fairness, Atwood suggests that there should be some '[r]ecognition of the doctrine of unconscionability...at the time of divorce in light of changed circumstances not foreseen by the parties'. Brod’s definition is more far reaching than this. Brod argues the court should look to the ‘economic justice’ of enforcing the agreement. She writes:
If, as a consequence of enforcing the premarital agreement, the spouse is significantly worse off after marriage than before, then the agreement is economically unjust. The agreement has contributed to making the marriage a financially exploitative experience rather than an enriching one.
Brod submits that expert testimony could be used to place a financial 'value of the educational, career, and business opportunities that a spouse sacrificed during marriage'.
Whilst Brod’s definition would be optimal, such an assessment process does not seem at all realistic. This is because whilst section 79 of the Family Law Act specifically directs the court to value domestic work and child rearing, this is consistently undervalued (as discussed above). Brod submits that the law’s goal 'should' be 'the attainment of economic justice at the end of marriage and the elimination of gender discrimination in the distribution of financial resources'. However, it is not apparent that this is a goal of family law in Australia.
On the other hand, Atwood’s definition would be easier to implement under the Family Law Act, to provide more protection to vulnerable parties. At present, s90K (1) (c) states that the agreement may be set aside if ‘in the circumstances that have arisen since the agreement was made it is impracticable for the agreement or part of the agreement to be carried out’. This should be amended to read ‘impracticable or unfair’, in line with Atwood’s model. Further, it is submitted that this should be additional to registration and court approval upon entry into an agreement. This is to allow the court scope to assess agreements upon enforcement, after changes in circumstances have occurred during marriage.
Courts in those states of the USA which have adopted the UPAA will not enforce an agreement concerning spousal support that will render a party dependent on ‘public assistance’: section 6(b) UPAA. The same is not true in Australia, where s90F (1) states that s90B agreements are exempt from this public policy consideration. This is an instance where the law in the USA has an added protection not found in Australia. It was a protection also recommended by the Hambly Report in 1987. In line with the UPAA, section 90B agreements should be included under s90F (1) i.e. giving the court power to make orders for maintenance if the terms of the agreement would leave the party ‘unable to support himself or herself without an income tested pension, allowance or benefit’.
I recognise that these recommendations make legal enforceability less certain for couples wanting to oust the jurisdiction of the Family Court by entering into a binding prenuptial agreement. Couples will not know whether their agreement will be considered ‘fair’ by the court upon enforcement. However, without assessment of substantive fairness women are left unprotected from more powerful men. As the law stands, Fehlberg and Smyth write that prenuptial agreements are 'likely to offer men more than women in terms of increased control and choice over how property is divided on marriage breakdown'. This is a compelling public policy reason justifying added protection, towards achieving a better balance between ‘freedom to contract’ and ‘protection of vulnerable parties’.
Now that Australia has introduced reforms allowing couples to enter into binding prenuptial agreements which oust the jurisdiction of the Family Court, it is critical to ensure that the law governing prenuptial agreements strikes an appropriate balance between ‘freedom to contract’ and ‘protection of vulnerable parties’. It is clear that in many states within the USA have prized freedom to contract above all else, with Pennsylvania providing a stark example: Simeone v Simeone. Furthermore, Atwood’s observation in relation to the UPAA is quite disturbing. She argues that 'the drafters....seem to have so constrained the available challenges to antenuptial agreements that such agreements would survive in circumstances that the ordinary commercial contract would not', making the dangers of prenuptial contracting for women very real.
The law in Australia has achieved a better balance and avoided much of the harshness of the law in the USA. At the time of entry into an agreement, Australian protections include compulsory independent legal advice and unconscionability at the time of entry into agreement is enough of itself to make the agreement unenforceable. At the time of enforcement there is scope for limited inquiry into fairness. The court overall has wider scope for setting aside agreements under s90K and may also draw upon general common law and equitable principles: s90KA.
There is still plenty of room for improvement, however, especially in the quest to protect the interests of women who are particularly vulnerable. The reforms I have proposed are in line with Brod’s general point that:
By enforcing agreements only if there are guarantees of substantive or procedural fairness, the law will mitigate the disparate impact of premarital agreements on women as a class, while avoiding paternalism and respecting the rights of women (and men) to contract in their own best interests.
Therefore, in summary, the following reforms are required. Firstly, further protection upon entry by court registration and approval of agreements and a one-month ‘cooling off period’. Secondly, assessment of substantive fairness by amending section 90K (1) (c) so that it reads that an agreement is unenforceable when ‘in the circumstances that have arisen since the agreement was made it is impracticable or unfair for the agreement or part of the agreement to be carried out’. Thirdly, a public policy exception, i.e. inclusion of section 90B agreements under s90F (1).
Procedural and substantive fairness are the linchpins of court assessment of prenuptial agreements. The law reforms advocated would increase protections in order to better achieve both under Australian law, thereby increasing the chances of avoiding many of the dangers of prenuptial contracting for women revealed by the US experience.
[*] BA LLB (Hons), Casual Lecturer, School of Law, University of Western Sydney.
 Referred to as ‘premarital’ or ‘antenuptial’ agreements in the USA, however, ‘prenuptial agreements’ will be adopted for consistency.
 Effective 27 December 2000 - B Fehlberg and B Smyth ‘Binding Prenuptial Agreements in Australia: The First Year’ (2002) 16 International Journal of Law, Policy and the Family 127 at 127.
 B Fehlberg and B Smyth ‘Pre-nuptial Agreements for Australia: Why Not?’ (2000) 14 Australian Journal of Family Law 80 at 81.
 Fehlberg and Smyth, n3 at 93.
 P Parkinson ‘Setting Aside Financial Agreements’ (2001) 15 Australian Journal of Family Law 26 at 27.
 This comment was made of the proposals for reform by Fehlberg and Smyth, n3 at 101.
 Fehlberg and Smyth, n2 at 100.
 B A Atwood ‘Ten Years Later: Lingering Concerns About the Uniform Premarital Agreement Act’ (1993) 19 Journal of Legislation 127 at 136.
 Posner v Posner 233 So.2d 381 (Fla. 1970). Followed shortly by the Californian Supreme Court in In re Marriage of Dawley 551 P.2d 323 (Cal. 1976).
 Although may have begun as early as the late eighteenth or early nineteenth century – see J B Singer ‘The Privatization of Family Law’ (1992) 5 Wisconsin Law Review 1443 at 1445 in footnote 1.
 M M Shultz ‘Contractual Ordering of Marriage: A New Model for State Policy’ (1982) 70 California Law Review 204 at 272-73.
 B H Bix ‘Premarital Agreements in the ALI Principles of Family Dissolution’ (2001) 8 Duke Journal of Gender, Law and Policy 231 at 234.
 Atwood, n8 at 127.
 Bix, n12 at 233.
 S N Katz ‘Marriage as Partnership’ (1998) 73(5) Notre Dame Law Review 1251 at 1260.
 A A Marston ‘Planning for Love: The Politics of Prenuptial Agreements’ (1997) 49 Stanford Law Review 887 at 898.
 G F Brod ‘Premarital Agreements and Gender Justice’ (1994) 6 Yale Journal of Law and Feminism 231 at 255.
 Stregack v Moldofsky 474 So. 2d. 206 (Fla. 1985).
 Per McDonald J at 207, with Boyd CJ, Overton, Alderman and Shaw JJ concurring.
 Atwood, n8 at 137-38.
 Fletcher v Fletcher 628 N.E.2d 1343 (Ohio 1994) at 1348. Although the agreement in this case was upheld for other reasons.
 Atwood, n8 at 138; Brod, n17 at 259.
 P Gainsley and S C Rhode ‘The Role of Substantive Fairness in Premarital Agreements’, in EL Winer and L Becker (eds) Premarital and Marital Contracts. A Lawyer’s Guide to Drafting and Negotiating Enforceable Marital and Cohabitation Agreements, American Bar Association, USA, 1993 at 61. See for example Button v Button 388 N.W.2d 546 (Wis. 1986).
 Gainsley and Rhode, n23 at 60.
 L Becker ‘Premarital Agreements: An Overview’, in E L Winer E.L. and L Becker (eds) Premarital and Marital Contracts. A Lawyer’s Guide to Drafting and Negotiating Enforceable Marital and Cohabitation Agreements, American Bar Association, USA, 1993 at 23.
 Simeone v Simeone 581 A.2d. 162 (Pa. 1990) at 166.
 Note 26 at 163.
 Note 26 at 166.
 ‘Developments in the Law: V. Marriage as Contract and Marriage as Partnership: The Future of Antenuptial Agreement Law’ (2003) 116 Harvard Law Review 2075 at 2083.
 This is undefined and it is therefore left to the courts to interpret – Harvard Law Review, n29 at 2084.
 Brod, n17 at 276.
 Atwood, n8 at 129.
 Marston, n16 at 891-92.
 Brod, n17 at 243. She provides examples in footnote 67.
 Kahn v Kahn 756 S.W.2d. 685 (Tenn. 1988) at 686.
 Hyman v Hyman  AC 601. Approved by the High Court in Brooks v Burns Philp Trustee Co. Ltd.  HCA 4; (1969) 121 CLR 432.
 M Hyland ‘Pre-Nuptial Agreements: Is There a Need for Legislative Change?’ (1996) 43(7) Law Society Journal 72 at 73.
 Hyland, n37 at 73.
 G Sheehan ‘Financial Aspects of the Divorce Transition in Australia: Recent Empirical Findings’ (2002) 16 International Journal of Law, Policy and the Family 95 at 123 in endnote 35.
 R McBain ‘Drafting pre-marriage contracts’ (1994) 68(4) Law Institute Journal 260 at 260.
 This test was stated by Lindenmayer J in the Marriage of Dzieczko  (Family Court of Appeal, 30 April 1992, Appeal No 125 of 1991, No PA1405 of 1990, Strauss, Lindenmayer and McCall JJ, unreported) - cited by Fehlberg and Smyth, n3 at 82.
 G & G  FamCA 1075 (22 August 2000) per Nicholson CJ.
 N42 at paragraphs 4 and 16.
 N42 at paragraphs 23-25.
 N42 at 27 (Nicholson CJ citing the trial judge).
 N42 at paragraphs 31-33.
 N42 at paragraph 31 (Nicholson CJ upholding the decision of the trial judge).
 Australian Law Reform Commission 39 Matrimonial Property, 1987 at paragraphs 438-39.
 P Brereton ‘The New Regime of Financial Agreements’ in The College of Law Seminar Papers ‘Family Law Day’, The Continuing Professional Educational Department of the College of Law, Sydney 24 Feb 2001at 72.
 This applies to sections 90C and 90D agreements also.
 Discussion of the elements of this advice is forthcoming.
 Mallet v Mallet (1984) 156 CLR 605. Specifically Mason J at paragraph 20 and Deane J at paragraph 3.
 Hyland, n37 at 74. In New South Wales, for example, de facto couples have long been allowed to oust the jurisdiction of the court with the use of cohabitation agreements: section 47 of the De Facto Relationships Act 1984 (NSW) (now termed ‘domestic relationship agreements’: section 47 Property (Relationships) Act 1984 (NSW)).
 B Fehlberg and B Smyth ‘Binding Pre-marital Agreements. Will They Help?’ (1999) 53
Family Matters 55 at 57.
 Fehlberg and Smyth, n2 at 134-35.
 Fehlberg and Smyth, n2 at 134.
 Parkinson, n5 at 27.
 M Neave ‘Private Ordering in Family Law - Will Women Benefit?’ in Thornton M. (ed) Public and Private. Feminist Legal Debates, Oxford University Press, Australia, 1995 at 168.
 Neave, n58 at 169.
 T L Perry ‘Dissolution Planning in Family Law: A Critique of Current Analyses and a Look Toward the Future’ (1990) 24(1) Family Law Quarterly 77 at 89.
 Sheehan, n39 at 111.
 Australian Bureau of Statistics ‘Australian Social Trends 2002’ Catalogue No.4102.0, Commonwealth of Australia, 2002 at 124
 Neave, n58 at 168.
 Brod, n17 at 245.
 Brod, n17 at 243.
 Fehlberg and Smyth, n2 at 134.
 R H Mnookin and L Kornhauser ‘Bargaining in the Shadow of the Law: The Case of Divorce’ (1979) 88 Yale Law Journal 950.
 A Parashar ‘Reconceptualisations of Civil Society: Third World and Ethnic Women’ in M Thornton (ed) Public and Private. Feminist Legal Debates, Oxford University Press, Australia, 1995 at 236.
 There are other problems, including the underestimation of future needs. See generally Sheehan, n39.
 Sheehan, n39 at 107.
 H Charlesworth ‘Domestic Contributions to Matrimonial Property’ (1989) 3 Australian Journal of Family Law 147 at 154.
 R Graycar ‘Matrimonial Property Law Reform and Equality for Women: Discourses in Discord?’ (1995) 25 Victoria University of Wellington Law Review 9 at 13.
 B & B (No. 2)  FamCA 734.
 N73 at paragraph 68.
 As recently as 1993, the Family Court acknowledged that the issue had not be raised in any case: per Fogarty, Lindenmayer and McGovern JJ In Marriage of Best  FamCA 107; (1993) FLC 92-418 at paragraph 42.
 Neave, n58 at 160.
 G Sheehan and J Hughes ‘The Division of Matrimonial Property in Australia’ (2000) 55 Family Matters 28 at 30-31.
 M Neave ‘Resolving the Dilemma of Difference: A Critique of ‘The Role of Private Ordering in Family Law’’ (1994) 44 University of Toronto Law Journal 97 at 115.
 M Neave ‘From Difference to Sameness - Law and Women’s Work’  MelbULawRw 18; (1992) 18(4) Melbourne University Law Review 768 at 780.
 Weitzman L.J The Divorce Revolution. The Unexpected Social and Economic Consequences for Women and Children in America, The Free Press, New York, 1985.
 Australian Institute of Family Studies (P McDonald P as editor-in-chief) Settling Up. Property and Income Distribution on Divorce in Australia, Prentice-Hall of Australia, Australia, 1986.
 This was a national survey of 650 divorced people and examined financial living standards approximately 6 years after separation - Sheehan, n39 at 98 and 101.
 Sheehan, n39 at 95.
 In Marriage of Mitchell (1995) 19 Fam LR 44.
 N84 at paragraph 79.
 Fehlberg and Smyth, n3 at 93.
 Marston, n16 at 913.
 Atwood, n8 at 144.
 Brod, n17 at 259.
 Orgler v Orgler 568 A.2d. 67 (N.J. Super. Ct. App. Div. 1989) at 70-71.
 Cited by Fehlberg and Smyth, n2 at 135.
 Fehlberg and Smyth, n2 at 136.
 Fehlberg and Smyth, n2 at 135.
 B Bix ‘Bargaining in the Shadow of Love: the Enforcement of Premarital Agreements and How We Think About Marriage’ (1998) 40 William & Mary Law Review 145 at 207.
 Brod, n17 at 289.
 Marston, n16 at 916.
 Fehlberg and Smyth, n3 at 92.
 Louth v Diprose  HCA 61.
 N98 See Deane J’s judgment at paragraph 10; Dawson, Gaudron and McHugh JJ’s judgment at paragraph 10.
 B Fehlberg ‘Two New Amendment Bills’ (2000) 57 Family Matters 76 at 76.
 K C Zelig ‘Putting Responsibility Back Into Marriage: Making a Case for Mandatory Prenuptials’ (1993) 64 University of Colorado Law Review 1223 at 1231.
 Fehlberg and Smyth, n3 at 84.
 Section 86A provides that ‘A maintenance agreement made after the commencement of this section that is not a financial agreement does not have any effect and is not enforceable in any way’.
 Neave, n58 at 154.
 Fehlberg and Smyth, n3 at 84.
 Fehlberg and Smyth, n2 at 128.
 Neave, n58 at 157-58.
 Zelig, n101, at 1232.
 J Bowen Love & the Law, Allen and Unwin, Sydney, 2000 at 19.
 Neave, n78 at 120.
 This type of situation will be discussed further in relation to the possible operation of the doctrine of ‘undue influence’ under section 90K (1) (b).
 Fehlberg and Smyth, n2 at 133.
 Parkinson, n5 at 50.
 Parkinson, n5 at 26.
 Marston, n16 at 899.
 Brod, n17 at 253.
 N98 - See Deane J’s judgment at paragraphs 13 and 14; Dawson, Gaudron and McHugh JJ’s judgment at paragraph 10.
 N98 - See Deane J’s judgment at paragraph 10; Dawson, Gaudron and McHugh JJ’s judgment at paragraph 12.
 For a discussion about ‘storytelling’ and this case see L Sarmas ‘Storytelling and the Law: A Case Study of Louth v Diprose’  MelbULawRw 8; (1994) 19 Melbourne University Law Review 701.
 In relation to financial agreements generally, Parkinson submits that 'fraud might have one of three meanings: fraudulent motivation for entering the marriage; deception; non-disclosure', n5 at 30.
 Parkinson, n5 at 33.
 Stregack v Moldofsky 474 So. 2d. 206 (Fla. 1985).
 Parkinson, n5 at 40.
 Parkinson, n5 at 40. See for example Garcia v National Australia Bank Ltd (1998) 194 CLR at .
 Johnson v Buttress  HCA 41; (1936) 56 CLR 113 at 134 per Dixon J.
 N98 at paragraph 4 of Brennan J’s judgment.
 Parkinson, n5 at 40.
 Parkinson, n5 at 41.
 Parkinson, n5 at 43.
 In re Yannalfo 794 A.2d 795 (N.H. 2002)
 Cf Ohio where in Fletcher v Fletcher 628 N.E.2d 1343 (Ohio 1994) the court held that presenting a prenuptial agreement at short notice will create a 'presumption of overarching coercion' if it can be shown that postponing the wedding would cause 'significant hardship, embarrassment or emotional stress'. Although this was not found to be the so in this case, as it was a small informal wedding. See 1347-48.
 In re Yannalfo 794 A.2d 795 (N.H. 2002) at 798.
 N42 at paragraphs 16 and 24.
 N42 at paragraph 16 (Nicholson CJ citing the wife’s affidavit).
 N42 at paragraph 4.
 Parkinson, n5 at 44.
 This was not established in Bigg and Suzy  FamCA 14. See Barblett DCJ, Lindenmayer and Finn JJ at paragraph 6.52.
 Parkinson, n5 at 44.
 P Parkinson ‘Financial Agreements - A Practical Overview’ (2001) 15(1) Australian Family Lawyer 16 at 18.
 In the Matter of Woodcock Appeal No. SA CSA 63/96 No. AD 4674 of 1996.
 Bix, n94 at 156.
 G Watts ‘Binding Financial Agreements. Possibilities and Pitfalls’ (2001) 39(1) Law Society Journal 60 at 62.
 Watts, n142 at 62. He is referring to binding financial agreements generally, not specifically prenuptial agreements. See also generally Parkinson, n5.
 Fehlberg and Smyth, n2 at 131-32. This is supported by Neave who argues that maintenance agreements under section 87 were often approved where independent legal advice had been received, 'without enquiring into the substantive fairness of the agreement or the parties’ relative bargaining power', n58 at 159.
 N42 at paragraphs 22-24.
 Bix discusses some of the literature, n94, at 190; Parkinson, n5 at 27.
 Perry, n60 at 120.
 Brod, n17 at 284.
 Perry, n60 at 121.
 Fehlberg and Smyth, n2 at 133.
 Fehlberg and Smyth, n2 at 133.
 Atwood, n8 at 142 note 70.
 Brod, n17 at 241.
 Atwood, n8 at 134.
 According to Parkinson, n139 at 18.
 Parkinson, n5 at 47.
 Fehlberg and Smyth, n54 at 57.
 Simeone v Simeone 581 A.2d. 162 (Pa. 1990) at 166.
 Although Watts has suggested that sections 90K (1) (b) and 90KA 'do not confine unconscionability to the time of entering into a BFA [binding financial agreement]', n142 at 61.
 Atwood, n8 at 148.
 Fehlberg and Smyth, n2 at 130.
 Brod, n17 at 279-80.
 Williams v Williams 801 P.2d 495 (Ariz. Ct. App. 1990) at 498.
 See for example Brod, n17 at 256-59.
 Atwood, n8 at 150.
 Brod, n17 at 285 in footnote number 303.
 Brod, n17 at 294.
 Atwood, n8 at 144.
 Fehlberg and Smyth, n3 at 84.
 Perry, n60 at 100.
 Fehlberg and Smyth, n2 at 129.
 Parkinson, n5 at 27.
 Parkinson, n5 at 27.
 Atwood makes this observation of the UPAA, n8 at 130.
 Simeone v Simeone 581 A.2d. 162 (Pa. 1990).
 Atwood, n8 at 146.
 Brod, n17 at 295.