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The dos and don’ts of prenuptial agreements and Binding Financial Agreements and the enforceability of a “no public dating” clause

Posted by Kirstie Barfoot on 11 Dec 2017

Can they even do that?

A myriad of rumours have circulated concerning whether the prenuptial agreement surrounding the separation of Tom Cruise and Katie Holmes contained a clause that prohibited Katie from ‘dating publicly’ for five years. The general public and members of the legal profession have engaged in online debates about whether such a clause could be enforced by any Court, and if it can be enforced, what else could be included in a prenuptial agreement that dictates how people can behave following a separation?

So, can an agreement control what you are allowed to eat? Can it control your holiday destinations? Can it control the colours of the clothing you wear? Can it control who you date? In short – absolutely not. 

Under Australian law, a “prenuptial agreement” is known as a “binding financial agreement” or “BFA,” and the powers and abilities of our Courts to enforce a BFA are found in the Family Law Act.

By way of a brief legal lesson (bear with me, I promise I’ve kept it brief) the Family Law Act is a federal act because the Australian Constitution states that laws surrounding marriage, divorce, and parental rights are to be dealt with by the Federal Parliament. This means that the rights and powers found in the Family Law Act (including drafting and enforcing BFAs) have to in some way link to a marriage or de facto relationship, or the children and wards of those relationships. This includes joint finances and a lot of complicated parenting issues but not the general behaviour of the parties or their ability to make independent decisions (unless those decisions involve the children) moving forward.

The US operates, at least in some respects, quite differently. Firstly, BFAs are handled by individual states rather than federally so each state may have its own laws and regulations surrounding what’s enforceable as a valid clause in a prenuptial agreement. Some states also view prenuptial agreements as standardised contracts in addition to being family law issues that, at least in theory, can be enforced under civil law. This means that couples may be able to include clauses that, whilst novel to the US family courts, have potential to be enforced as a ‘breach of contract’ in certain states. The consequences of that ‘breach’ would likely be specified in the prenuptial agreement itself (and would presumably be associated with marital funds or alimony payments).

It‘s important to note that many of the more novel and obscure clauses that are included in high profile prenuptial agreements have never been “tested” or have never actually been litigated through a court system. Therefore, there is currently only really a ‘possibility’ for those clauses to be enforced by overseas Courts.

One thing that is quite clear however, is that they can’t be enforced by Australian Courts. The intention of BFAs in Australia is to allow parties to negotiate and decide how their assets would be divided after separation. It gives you an opportunity to consider your assets (including heirlooms, family companies, real estate, etc), and set up a fair and legally sound agreement to prevent stressful and costly litigation in the future. BFAs are required to include both present and future circumstances (including the potential for bankruptcy, the inheritance of large sums of money or having children) and express how that agreement may shift if the parties’ circumstances change over time.

The Courts don’t make it easy to enforce a BFA in Australia, and can disregard them if they haven’t been drafted fairly, or in accordance with the Family Law Act. BFAs are required to consider all relevant factors in two peoples’ lives, and provide both signing parties with protection and confidence that they have discussed and addressed their options. Whilst including clauses that are novel and unusual may seem appealing in Hollywood, it’s simply not appropriate in most jurisdictions.

It is likely that if any “no public dating clause” were brought before an Australian court, that clause would be seen as impractical and unenforceable. The court may, depending on the remainder of the agreement, even determine that the entirety of the BFA is unenforceable if they feel it is coloured by that clause.

If you have questions or concerns about what has been included in a binding financial agreement, or are considering entering into one, contact one of our Family Law team of specialists or:

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