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Divorce law blog

Law Commission Recommends “qualifying Nuptial Agreements” should be legally binding – a view from North of the Border

05/03/2014   By:

In recommending that Nuptial Agreements meeting certain criteria should be made legally binding, the Law Commission’s proposals, if adopted, would bring the law of England and Wales in line with the law of other jurisdictions; and those other jurisdictions include Scotland.

In Scotland there is no specific legislation that makes reference to “ Nuptial” Agreements. However, Scottish legislation does provide that any Agreement entered into between the parties to a marriage in respect of financial provision on divorce can only be set aside in the context of a divorce action, and only if the Agreement is found to be unfair and unreasonable when entered into.  While a Pre Nuptial Agreement has never been tested fully by the Scottish Court under current legislation, the widely held view is that is because there is no doubt in the mind of the Scottish Family Law profession that such agreements will be enforceable. 

There has, to date, been a disparity between the approach taken by the Courts of England and Wales and the approach taken by Scotland to nuptial agreements. This difference of approach undoubtedly raises difficulties for couples who split their time North and South of the Border.

Are there any rules as to when Nuptial Agreements will not be enforceable in Scotland?

The Law Commission has recommended a number of conditions for an Agreement to be considered a “Qualifying Nuptial Agreement”.  These are set out in the previous blog.  There are no such specific rules that apply to the enforceability of such agreements in Scotland. 

Perhaps the most significant difference between the position under Scots Law and the Law Commission’s proposals is the desire to retain a “get out” clause for the Court if an Agreement does not meet the financial needs of the weaker spouse.  By comparison, the leading Scottish case on whether an Agreement should be set aside specifies that just because the terms of an Agreement create an unfair result, does not of itself, render the Agreement unfair and unreasonable such that the parties should not be held to the Agreement.

Of the other conditions suggested by the Law Commission the three perhaps most worthy of comparison with the position in Scotland are the 28 day time limit, disclosure and independent legal advice.

There are no hard and fast rules in Scotland as to how soon before a marriage a Pre Nuptial Agreement must be signed.  A Pre Nuptial Agreement presented to the bride on the eve of her wedding as a condition of the wedding going ahead would most certainly be at risk of being set aside by a Court in due course.  A Pre Nuptial Agreement signed the day before a wedding when parties had instructed solicitors to negotiate the terms of an Agreement on their behalf would not.  

On the issue of disclosure, while there is clearly an argument that if a party does not know the value of the assets they are giving up rights to by signing a Pre Nuptial Agreement that could be considered unfair.  It is therefore the practice in Scotland for schedules of each party’s assets to be appended to the Agreement.  However, if a party to an Agreement was advised by their solicitor to seek full disclosure, and they elected not to, then again the lack of disclosure would not necessarily render an Agreement unfair and unreasonable.

The final recommendation is that both parties should receive legal advice on the Agreement.  This is certainly what we, at Turcan Connell, recommend to our clients and it is always our preference.  However, if a party to the Agreement was advised to take independent legal advice and elected not to, then again that would not in Scotland render an Agreement unfair and unreasonable.

When preparing a Pre Nuptial Agreement in Scotland there are certain drafting precautions that require to be taken when acting for a client where full disclosure has not been sought; where independent legal advice has not been taken and/or where an Agreement is being signed in close proximity to the wedding day.  However, unless there is some kind of deliberate dishonesty when the parties entered into an Agreement, and if both parties have had the opportunity to take legal advice on the terms of any Pre Nuptial Agreement, it would be an uphill struggle to say the least to successfully argue that an Agreement was unfair and unreasonable and thus should be set aside.

Where does this leave the public and profession in Scotland?

The position for clients looking to enter into a Pre Nuptial Agreement in circumstances where Scots Law would apply in the event of any separation or divorce will remain unchanged irrespective of whether the Law Commission’s proposals are, in due course, incorporated within matrimonial legislation in England and Wales.

However, for those with interests both sides of the border the Law Commissions proposals, if effected would be a welcome move towards certainty.  As a practical point, any Scottish Solicitor drafting an Agreement where the parties might reside in England in due course, would be wise to ensure such an Agreement complied with the “qualifying Nuptial Agreement” conditions.

Written by guest blogger, Sally Nash, of Turcan Connell.

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