Tuesday, 4 March 2014

Something old, something new...?

Dr Jane Mair, Senior Lecturer (Law) at University of Glasgow and  co-author of  'All Settled? A study of legally binding separation agreements and private ordering in Scotland?' considers the implications for Scotland on the recent recommendations from The Law Commission (England and Wales) for a Nuptial Agreements Bill.

The Law Commission (England and Wales) recently published their Report on Matrimonial Property, Needs and Agreements (LawCom No 343). The culmination of an extended project, they are recommending new legislation which would introduce “qualifying nuptial agreements” and have presented a draft Bill; the Nuptial Agreements Bill.

These recommendations and the proposed new legislation offer something very new for English law. Even with a clear message of support for agreements from the Supreme Court in Radmacher v Granatino 2010 UKSC 42, pre-nuptial and post-nuptial agreements between parties are currently not contractually enforceable.

For Scotland, this is nothing new. Marriage contracts – pre or post-nuptial – have long been established as enforceable and separation agreements in particular have become increasingly popular. A recent study of 600 separation agreements registered in Scotland in 2010, found that the use of agreements had almost doubled since 1992 (Mair, Wasoff and Mackay, All Settled? A study of legally binding separation agreements and private ordering in Scotland, 2013, ESRC). Thanks to a simple system of registration in the Books of Council and Session and without any need for court involvement - couples can easily enter into legally enforceable agreements which deal with the consequences of divorce, dissolution or separation.

So is there anything new for Scots law in what England is proposing? The flexibility and ease of the Scottish system may be the key to its success. It has grown organically, with little need for review, and the multi-purpose format of the registered Minute of Agreement accommodates agreements entered into at any stage in the relationship. Perhaps what Scots law should now do is reflect on some of the concerns and protections which are considered in detail in the Law Commission’s report. In distinguishing between pre-nuptial and post-nuptial agreements, for example, they comment (para 1.11) that:

“The former involve an element of prediction; the parties are setting out what they will need, and what they will be content with, in circumstances whose reality they may be unable to foresee. Separation agreements on the other hand deal with a known reality or at least one that is immediately anticipated”.

This is not a distinction which is highlighted in Scots family law. Aside from the general contractual scope for challenge, the only specific provision in Scots law allowing for setting aside or reduction of a “nuptial agreement” is to be found in section 16 of the Family Law (Scotland) Act 1985, which applies in the context of divorce and operates only “where the agreement was not fair or reasonable at the time it was entered into”. Section 16 applies “where the parties to a marriage have entered into an agreement as to financial provision to be made on divorce”; held in Kibble v Kibble 2010 SLT (Sh Ct) 5 to include an ante-nuptial agreement, which purported to provide for possible future divorce. While parties who enter into private agreement can feel reassured that the terms will be enforceable, they do need to consider carefully the long term effects. What seemed fair and reasonable to them prior to marriage may not look so attractive – to one party at least – on divorce.

There is nothing new for Scots family law in the idea of openness to legally binding nuptial agreements but it might do no harm to take a new look at an old form.

Read the CRFR briefing: Legally binding agreements: property division and child care when relationships break down.
Read the full report: All Settled? A study of legally binding separation agreements and private ordering in Scotland? Final Report.
Contact Jane Mair

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