Wednesday, August 16, 2017

Binding Prenuptial Contracts in Scotland versus Catch-22 Prenuptial Contracts in England

I had a civil and pleasant exchange of ideas with Dr Russell Sandberg about prenuptial contracts in England and Scotland.

https://www.researchgate.net/profile/Russell_Sandberg


Dr Russell Sandberg  had concerns about binding prenups (which Scotland allows) and changing circumstances:

" I think my point would be that the level playing field may well exist at the time when the pre-nup is signed but that things may change as the relationship develops."

I replied:

Things change in all kinds of nonmarital contract situations, but one still has to abide by the contract in almost all other situations. Nonmarital contracts often have provisions for changing circumstances, but these have to be specified at the time the contract is signed and not simply made up later. Given that most of the "possible changes" are well-known, the terms under these possible changes can be specified in the prenuptial contract. Specifying the terms for the ten (one hundred?) most common relationship changes would provide clarity for almost all common changes.

They may be rare, but there may be changes not specified in the prenuptial contract. Or, perhaps one party simply changes her/his mind about the prenuptial contract? Scottish Law apparently has this situation covered as well because post-nuptial contracts are allowed. So, if one spouse does not want to be bound in the future by a prenuptial contract, that spouse can ask to renegotiate a new contract. If no agreement on a new contract can be reached, then the parties divorce under the existing conditions of the currently signed agreement. This sounds fair and reasonable. The moneyed spouse is protected by the prenuptial agreement. The non-moneyed spouse is protected by the ability to terminate the prenuptial contract any time she/he wishes , either by renegotiation or divorce. Thus, there is no reason for either spouse to be bound by a prenuptial contract for longer than it takes to file appropriate papers to renegotiate or divorce.

Scotland has it right.



According to Dr Russell Sandberg, English law does not permit a binding prenuptial contract. English courts uphold the prenup

" ... unless in the circumstances prevailing it would not be fair to hold the parties to their agreement."

I replied as below.

I wish the English luck with keeping the judgement of what "would not be fair" from legal creep. I suspect such a provision in the hands of American lawyers would quickly result in a catch-22 situation where the prenup would be voided whenever it would be truly useful. As long as the prenup did not have much effect, it would be in effect. But, because the government's preconceived prejudice is that the default contract is "fair," then any major deviation is, you guessed it, "unfair." For an American lawyer this would be like shooting fish in a barrel. (No offense intended to English lawyers.) When the prenup would cause a major difference from the default situation without the prenup, then the prenup would not be allowed to be in effect. Perhaps this would work better in England than in America though?

At a minimum, the spouse A who no longer wants to be bound by the agreement should be required to communicate that in a verifiable manner as soon as possible. The other spouse B should not learn about the "unfairness" or "non-level playing field" ten years afterward when spouse A is trying to have the prenup thrown out or modified, and B can do nothing about it. B doesn't have the choice of making things more to A's liking or divorcing if no agreement can be reached. This is outrageously unfair to spouse B as spouse A is then attempting to impose a different contract that has never even been discussed. Spouse A has legal representation before agreeing to the prenup contract, but spouse B can have a contract foisted upon spouse B with no knowledge, no consent, nor warning.

The English Law might make some sense if any claimed unfairness were restricted to a month, perhaps at most a year, before the divorce. One reasonable solution would be for any prenup to be reaffirmed or renegotiated on a yearly basis.

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