Factors for overturning a Contracting Out Agreement

The Court can set aside a Contracting Out Agreement if it considers that the Agreement is seriously unjust.  In deciding whether to do so, the first thing the Court will take into account is the wording of the Agreement, and whether the parties had made full disclosure to each other about their property.  It is important to get the terms of the Agreement right, to reduce the risk of the Agreement being set aside at a later stage.

The second thing that the Court takes into account is the amount of time which has passed since the Agreement was signed.  The longer an agreement remains unchallenged, the more difficult it would be to argue that it should be set aside.

Balanced against this however, is the third consideration which includes taking into account any change in circumstances.  If there was no disparity at the time an Agreement was entered into, but the passing of time results in a different situation, there is an increased chance that the Agreement may be set aside.

The fourth consideration considered by the Court is the fairness and reasonableness of the Agreement.  The Court will respect the parties’ freedom to consent to an Agreement, but it will be very important to show that the parties consented fairly.  Whether the parties had independent legal advice at the time of entering into the Agreement is a key consideration of fairness.  Whether the agreement is reasonable will depend on how different the parties’ rights are under the Agreement, as compared to their entitlements under the Property (Relationship) Act. 

The final consideration the Court takes into account is the presumed objective of the parties achieving certainty by entering into an Agreement.  In general the Courts tread carefully and cautiously before setting aside any Agreement for being seriously unjust.  This will however be weighed against undue influence, duress, psychological pressure, dominance and control exercised by one party over another.  The presence of these factors will weigh in favour of setting aside the Agreement.

The threshold for setting aside a Contracting Out Agreement remains relatively high and therefore, assuming the parties obtained good advice at the time, it remains the best way to protect the parties’ interest when entering into a relationship.