Law Commission publishes consultation paper on pre-nuptial agreements

The Law Commission has published its consultation on the future of pre-nuptial agreements, seeking views on a range of potential options for reforming the law of pre-nuptial, post-nuptial and separation agreements.

In its consultation, the Law Commission provisionally proposes that nuptial agreements should be in writing, with each party required to take legal advice, and the party seeking to enforce the agreement must have made full and frank disclosure of their financial situation. It also proposes that an agreement should not be enforceable if it fails to provide for the needs of any children of the family, or leaves one party dependent on state benefits. (See Hayley Trim's Analysis for further details of the proposals)

Professor Elizabeth Cooke, the Law Commissioner leading the project, commented: "Pre-nups are a topical issue. Under the current law the starting point for the resolution of financial division on divorce is the discretion of the court. Some feel that where couples have reached agreement, the courts should not be involved; yet the courts' approach is primarily protective, and some feel that they should not be wholly excluded.

"Our consultation paper considers the arguments for and against reform and examines how a new approach might balance the desire of some couples to plot their own future with more certainty against the need for safeguards against exploitation and the creation of hardship. This is an issue that needs to be handled with care."

The consultation follows the decision of the Supreme Court last October in the case of Radmacher v Granatino, which ruled that prenuptial agreements can be decisive in determining the financial division on divorce.

However many family lawyers are still frustrated by the lack of clarity in the law, and feel that the Supreme Court's decision in Radmacher - ­which introduced a fair contractual terms test to the enforceability of a nuptial agreement - did not sufficiently clarify the issue.

Graham Coy, family law partner at regional law firm Mundays Solicitors said:  "At last some light may be thrown on this very difficult area. The real problem is knowing when people will be held to what they have agreed in a Pre-Nup and this is what the Commission will need to deal with.

"Pre-Nups are not just something for the very rich; they are just as relevant and useful to anyone who is thinking of getting married."

The family lawyers' association, Resolution, has said it will be making the case to the Law Commission that pre-nuptial agreements should be considered binding as long as the needs of any children are satisfied and provided that they do not result in injustice.

Resolution's Chair David Allison said: "Financial uncertainty can be one of the most stressful elements of any divorce.

"A growing number of couples are signing pre-nuptial agreements as a way of minimising this uncertainty, but despite the historic Supreme Court judgment in October they still are not binding under English law. We strongly believe that pre-nuptial agreements should be legally binding and welcome this consultation as the first step in that process."

Professor Elizabeth Cooke will summarise the Law Commission's consultation paper in February's Family Law journal. To respond to the consultation paper, visit the Law Commission's website. The consultation closes on 11 April 2011.