What Makes a Binding Financial Agreement Legally Binding in Australia?
Binding Financial Agreements (BFAs) are private contracts that can help Australian couples plan for the future with clarity and respect. Whether you're entering a new relationship or navigating a separation, a well-drafted BFA can provide financial certainty and reduce the emotional and financial strain of potential disputes.
But for a BFA to be enforceable under Australian law, it must meet strict legal requirements. Here's what you need to know.
What Is a Binding Financial Agreement?
A Binding Financial Agreement (BFA) is a written agreement between two people that outlines how property, finances, and (in some cases) spousal maintenance will be handled in the event of a relationship breakdown. These agreements are governed by the Family Law Act 1975 (Cth) and are available to:
Couples about to marry or start a de facto relationship
Couples already in a marriage or de facto relationship
Couples who are separating or already divorced
BFAs are commonly known as “prenups,” but they can be made at any stage of a relationship—not just before it begins.
A Conscious Approach to Financial Agreements
Approaching a financial agreement doesn’t mean you’re expecting the relationship to end. It means you are being proactive, respectful, and conscious of each other’s financial wellbeing. When done thoughtfully, a BFA can offer peace of mind and reinforce open communication in your relationship.
Legal Requirements for a Valid BFA in Australia
To ensure a Binding Financial Agreement is legally enforceable in Australia, it must meet the following criteria:
1. It Must Be in Writing
The agreement must be a formal written document and signed by both parties. Verbal agreements are not recognised under the Family Law Act.
2. Each Person Must Receive Independent Legal Advice
Both parties must obtain independent legal advice from separate legal practitioners. This advice must explain:
The effect of the agreement on their legal rights
The pros and cons of signing the agreement
A signed certificate of advice from each lawyer must be attached to the agreement.
3. There Must Be No Pressure or Duress
The agreement must be made voluntarily, without coercion, undue influence, or emotional pressure. If either party was forced or rushed into signing, the agreement could be challenged in court.
4. Full and Honest Financial Disclosure
Both parties must provide complete and honest disclosure of all financial assets, debts, income, and liabilities. Any concealment can result in the BFA being declared void.
5. It Must Comply with the Correct Section of the Family Law Act
The BFA must be made under the appropriate section of the Family Law Act 1975, depending on the relationship stage:
Before marriage: Section 90B
During marriage: Section 90C
After divorce: Section 90D
Before a de facto relationship: Section 90UB
During a de facto relationship: Section 90UC
After breakdown of a de facto relationship: Section 90UD
6. It Must Not Be Terminated or Set Aside
The BFA must not have been terminated or successfully challenged in court. Courts can set aside a BFA in cases involving:
Fraud or non-disclosure
Duress or unconscionable conduct
Significant changes in circumstances (particularly regarding children)
7. It Must Be in Writing and Signed
The agreement must be:
In writing
Signed by both parties
The signature confirms that both individuals have agreed to the terms. Although witnessing is not legally required under the Family Law Act for BFAs, each party’s lawyer must provide a certificate confirming that legal advice was given before signing.
Why Consider a BFA?
Reduces uncertainty: Clarifies how property and finances will be managed
Minimises conflict: Prevents future disputes and litigation
Protects interests: Preserves personal and family assets
Supports communication: Encourages honest financial conversations
Final Thoughts
Binding Financial Agreements can offer couples a sense of control, security, and mutual respect. But because the legal standards are so high, BFAs must be drafted with precision and care. Legal advice isn't just a formality—it's essential to ensure your agreement is valid and stands the test of time.
If you’re considering a BFA, take the time to consult a family lawyer experienced in Australian family law. This is not just about protecting assets—it's about building trust and safeguarding your future.
Legal Disclaimer
This article provides general information only and does not constitute legal advice. The content is current as at July 2025 and applies to Australian law. You should seek independent legal advice tailored to your specific circumstances before making any decisions about Binding Financial Agreements or related legal matters.