A Set Procedure for Signing Binding Financial Agreements

Home News A Set Procedure for Signing Binding Financial Agreements

When finalising a Binding Financial Agreement, it is extremely important to have in place a set procedure for the execution and finalisation of these Agreements. There have been cases where Agreements have been wrongly executed, lost or vital things not attended to which have made the Agreement invalid. Under the Family Law Act, strict compliance is generally required with the wording of the Act to make these Agreements binding.

The following is a recommended process to follow when executing Binding Financial Agreements:-

  1. Ensure that the Financial Agreement is in final form before providing written advice to your client and a statement to the other Solicitor – in other words, do not provide a written advice to your client in relation to a draft Agreement that is then altered. Clearly, under the Act, a solicitor must provide advice to their client prior to the singing of the Agreement (that means the final version of the Agreement and not any earlier drafts);
  2. Once all parties have agreed that the terms of the Binding Financial Agreement are settled and finalised, then this is the time that the solicitor should provide advice to their client (written advice is preferable) about the effect of the Agreement on their rights and usually it is best to also outline the advantages and disadvantages of the Agreement. That advice must be forwarded to the client (it is best for a client to sign an Acknowledgement that they have read the advice) prior to them signing the Agreement;
  3. Once the letter of advice is provided to the client, a meeting should then be convened for the execution of the Agreement between all parties and their legal representatives;
  4. If possible, that meeting should take place in the one room at the same time;
  5. At the commencement of the meeting, the solicitors should exchange the statement indicating that they have already provided their client with an advice about the terms and effect of the Agreement upon their respective client. There is no need to exchange the actual advice (as this would be a breach of solicitor/client confidentiality) but the statements should be exchanged prior to signing;
  6. The original of the Agreement should then be signed by both parties. If there is a Receipt and Acknowledgement Certificate, then that should not be signed until the Agreement has been copied and provided to the other party. After the original has been signed then a copy should be taken and one party should retain a copy and the other party retains the original;
  7. Someone at the meeting should document all events that take place at this meeting and the times when documents were executed;
  8. A summary letter should be sent to the client summarising what has occurred and referring to the earlier written advice concerning the effect of the Agreement.

The above is just a snapshot of part of the process involved in making sure these Agreements are done properly and that the signing process is an integral part of that. There have been cases recently in the Family Court where one party was unable to produce any proof that a solicitor had provided oral advice or written advice to their client about the effect of the Agreement. If that occurs then there is a risk that the Agreement can be set aside.

Often, we hear people complain about how costly or how complicated these Agreements are. No one should be in any doubt that these are complex documents and the procedures to follow are critical to give the Agreement the best chance of withstanding future challenges to its integrity. Unfortunately, there are no short cuts to achieving this end.

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