Domestic Agreements and Planning for the future to avoid disputes

December 29, 2022

Domestic Agreements outlining expectations in the event of a relationship breakdown are certainly not romantic. We do not want to commemorate the beginning of something that is beautiful as marriage with the thought of what if it does not work out? However, it can happen and relationships end without any fault of either party. How do you navigate these unchartered waters with respect, dignity and compromise for your loved one?

Part I – What are domestic agreements?

A domestic agreement is an agreement that is negotiated between spouses with respect to their rights and obligations during the course of their relationship. Generally, domestic agreements are made by people who plan to live together or get married, or those made at the time of separation or after the breakdown of the relationship. Domestic agreements could cover some or all aspects of a relationship provided that the terms are legally enforceable.

Part II – Why domestic agreements should be part of the conversation?

Most common and important issues that arise out of a separation include how to divide solely and jointly owned property, and parenting time, support and decision-making with respect to Children. It is somewhat comforting when these difficult discussions are done at the outset of the relationship so that the parties know what to expect and how to move forward with their lives. If a court or an arbitrator has to decide on any of these issue, the parties significantly lose control over the outcome and results may be very different from what they would wish. Having clarity and a shared understanding of how to move forward at the time of a relationship breakdown also gives you more space to deal with the emotional consequences of separation and prioritize Children. A well-thought out agreement is considerably advantageous to a family who could potentially minimize litigation fees and strictly focus on the well-being of the family.

Part III – Basic requirements of a domestic agreement?

  1. Consideration – According to contracts law, there must be an exchange of something of value between the parties to bind the agreement. An exchange of promises between spouses is generally sufficient, but if the terms are strictly one-sided, something more is required such as based on “mutual love and affection”.
  2. Contractual language and terms must be clearly and explicitly stated.
  3. Formalities – the agreement must be signed and signatures must be witnessed in order for the agreement to be legally binding. They are not sworn documents however, they are enforceable if proper formalities have been met.
  4. Fairness – the terms of the agreement and bargaining positions of the parties must be fair. This is often ensured by exchanging full and frank disclosure between the parties, and by both parties obtaining independent legal advise prior to signing the agreement.

Part IV- How to set aside an agreement?

The Court may set aside a part or the whole agreement if there is evidence of duress, misrepresentation, undue influence, unconscionability, or fraud to have taken place during negotiations and at the time of signing. Here are some indicators of when a court may be inclined to set aside a part or the whole agreement.

  1. Duress– evidence of physical, financial, verbal or emotional violence, threats or imprisonment to force one to sign the agreement.
  2. Material misrepresentation or fraud – If financial or property information was not accurately and fully disclosed at the time of negotiations, then a part or the whole agreement may be set aside.
  3. Unconscionability – If there is a disparity between the bargaining positions of the parties, then the stronger or benefitting party is required to show that he/she has not taken advantage of the other and there were no inducements made to attract the other to sign the agreement.
  4. Undue influence – Using scare tactics to force a vulnerable spouse to enter into the agreement.
  5. Mistake– Mistakes with respect to valuations, terms and contents of an agreement could be rendered void by the court.

Bottom line is if you decide to enter into a domestic agreement, then clearly lay out your expectations and ensure fairness, transparency and open communication during the entirety of the process. Once you have a fully signed and witnessed agreement, review this agreement from time to time during the course of the relationship/marriage to ensure that the agreement still reflects what the parties wish for. If not, consult a lawyer and seek independent legal advice.

If you are entering into a separation agreement, a type of domestic agreement that is made at the time of separation or after the breakdown relationship/marriage, then it is equally important to ensure fairness, open communication and complete disclosure of information throughout the process. While it is not mandatory to have a lawyer during the process, it is highly recommended that you seek independent legal advise or representation to ensure informed decisions are made.

If you require assistance with drafting or reviewing a domestic agreement, feel free to contact us via email – info@pereralegal.ca.