The House of Commons Library has published a briefing paper which sets out the current status of prenuptial agreements and proposals for reform. The Library provides impartial information and research to MPs and their staff in support of their parliamentary duties. The Commons research briefings are intended to provide in-depth and impartial analysis of all major legislation as well as many areas of policy, including matrimonial law.
The paper explores the current status of prenuptial agreements and the development of the case law to date, as well as the Law Commission’s consultation on the status and enforceability of marital property agreements. In particular, the paper offers a detailed analysis of Vardags’ Supreme Court case Radmacher v Granatino, a landmark ruling, which transformed the way the English courts regard prenuptial agreements.
What is a prenuptial agreement?
The briefing paper defines a prenuptial agreement as “an agreement made by a couple before they marry or enter into a civil partnership, which sets out how they wish their assets to be divided if they should divorce or have their civil partnership dissolved”. The paper emphasises that prenuptial agreements are only one type of marital property agreement, the others include:
- Postnuptial agreements (made after a marriage or civil partnership).
- Separation agreements (made after separation and in anticipation of an imminent divorce or dissolution).
The current status of prenuptial agreements (Radmacher v Granatino)
The paper points out that traditionally, prenuptial agreements were unenforceable on the basis that they were considered to undermine the institution of marriage and attempted to fetter the discretion of the courts. However, in the landmark case of Radmacher v Granatino in 2010, where Vardags represented the wife, the Supreme Court held by a majority of eight to one that the courts should give effect to a prenuptial agreement that is freely entered into by each party, with a full appreciation of its implications, unless it would not be fair to hold to the parties their agreement.
Since Vardags’ victory in Radmacher v Grantino, the courts have become willing to attach weight to some prenuptial agreements. Indeed, the Supreme Court has ruled that both pre and postnuptial agreements have “magnetic importance” and spouses should be held to them unless it can be demonstrated that they are unfair in either how they were created or the effect thy would have.
Vardags’ President, Ayesha Vardag, has described it as a “thoroughly modern judgement” that has brought English matrimonial law in line with the rest of the world. In a statement after the court victory she said “from today, grown-ups can agree in the best of times what will happen in the worst of times”.
Nevertheless, as the briefing paper rightly points out, there is still a degree of uncertainty as to whether a court would make an order which reflects the terms of a prenuptial agreement. Radmacher v Granatino has emphasised that the enforceability of a prenuptial agreement will depend on the court’s view of its fairness and since the Supreme Court decision, weight has been given to some agreements but not others.
Subsequent case law has indicated that a prenuptial agreement cannot be allowed to prejudice the reasonable requirements of any children and that the longer the marriage has lasted, the more likely the agreement will be considered to be unfair. Furthermore, where a party is unable to meet their needs fairness may require a departure from the agreement.
Baroness Deech has called this:
“the worst of both worlds…Judges have said that pre-nups can be binding, but they have applied so many conditions to their validity that couples now spend hundreds of thousands of pounds litigating over whether the pre-nup is binding, which defeats the purpose.”
The Law Commission project
The Law Commission project was set up to try and resolve some of the uncertainty regarding the status of prenuptial, postnuptial and separation agreements. In 2014, the Commission proposed that with some conditions, couples should be able to enter into binding agreements which would not be subject to the court’s assessment of fairness. Certain requirements would have to be met in order for the agreement to be a “qualifying nuptial agreement”, including:
- The agreement must be contractually valid.
- The agreement must be made by deed and must contain a statement of understanding signed by both parties.
- The agreement must not have been made within 28 days immediately before the wedding or civil partnership.
- Both parties to the agreement must have received disclosure of material information about the other party’s financial situation.
- Both parties must have received legal advice at the time the agreement was formed.
The future of prenuptial agreements
The Government is considering the Law Commission’s recommendation on qualifying nuptial agreements and in January 2017 they confirmed that they will respond in due course in the context of their wider plans for family law and system reform.
Although we await further guidance from the government, prenuptial agreements clearly have and will continue to have an important status in matrimonial law. Provided that a prenuptial agreement can be demonstrated as fair, it is very likely to be binding.