The insurance people who insure lawyers in NSW claim that binding financial agreements (BFAs)have led to an increase number of insurance claims, due to the agreements being found to be invalid. These agreements are used by people in relationships to agree in advance about what is to happen with assets of a relationship when they no longer like each other.

In order to be valid the agreements require each party to get independent advice and have a written certificate provided to them which is then exchanged with the other party. Experience in the field suggests that people frequently talk about these issues but then one party (usually the one who doesn't have much to lose) decides not to proceed. Often, this occurs around the time when the independent advice is being given. In one typical matter the prospective wife had arranged a wedding which was to take place in the Whitsundays with due pomp and expense. The BFA was required to be signed shortly before this delightful event took place, but the would be wife got cold feet. She told her beloved something about signing it after the wedding. Since she never returned to complete her BFA, one could only assume that it never eventuated. This outcome is far from rare.

The lesson to be learnt, is get your BFA well in advance of any wedding or significant event. There is a decision of the Family Court in which it was accepted that a fiance who threatens to call off a wedding if a BFA is not signed, had exercised duress over the other party, invalidating the agreement. If such theories were applied to banks granting loans presumably no bank could safely make a loan.