A Binding Financial Agreement (BFA) is supposed to lock in how you and your partner will divide assets if you separate. But Australian courts can and do set BFAs aside, sometimes years after they were signed. The closer the agreement was signed to the start of your relationship, the more vulnerable it is at separation, because life changes that were not foreseen can create real hardship and unfairness.
Introduction
Q1: If I signed a BFA without proper independent legal advice, can it still be enforced?
A: In most cases, no. Section 90G of the Family Law Act 1975 requires each party to receive independent legal advice from a separate practitioner and to receive a signed certificate to that effect. Where the legal advice or witnessing was a sham, courts treat the agreement as not binding. Reference: Pagani & Pagani [2023] FedCFamC2F 805
Q2: Can I challenge a BFA years later if my circumstances have changed dramatically?
A: Yes. Section 90K(1)(d) lets a court set aside an agreement if a material change in circumstances relating to the care of a child causes hardship to the child or carer. A 2005 BFA was set aside in 2019 for exactly this reason after children were born to the marriage. Reference: R Lawyers v Mr Daily [2025] HCA 41
Q3: Does signing a BFA close to the wedding day make it easier to overturn?
A: Yes. Agreements signed in the final days before a wedding raise serious questions about whether you had time for proper independent legal advice and whether you were under unfair pressure. In one recent case, multiple agreements signed on or around the wedding day were found not binding. Reference: Shala & Shala [2025] FedCFamC1F 639
What does setting aside a Binding Financial Agreement actually mean?
When you ask a court to set aside a BFA, you are asking the judge to declare the document legally ineffective so it no longer binds you or your former partner. Setting aside removes the contractual barrier that would otherwise stop you from going to court for a property settlement. Once set aside, you and your former partner return to the standard process under section 79 of the Family Law Act 1975 (married couples) or section 90SM (de facto couples).
This is not a general power to fix a deal you regret. It is a specific statutory power. For married couples, section 90K(1) sets out the only grounds on which a court can set aside an agreement:
- The agreement was obtained by fraud, including non-disclosure of a material matter (s 90K(1)(a))
- A party entered the agreement to defraud or defeat a creditor, or with reckless disregard for a creditor (s 90K(1)(aa))
- The agreement is void, voidable or unenforceable (s 90K(1)(b))
- Since the agreement was made, circumstances have arisen that make it impracticable for the agreement to be carried out (s 90K(1)(c))
- Since the agreement was made, a material change in circumstances relating to the care, welfare and development of a child of the marriage has occurred, and a party or the child will suffer hardship if the agreement is not set aside (s 90K(1)(d))
- A party engaged in unconscionable conduct in respect of the making of the agreement (s 90K(1)(e))
- A payment flag is operating on a superannuation interest under Part VIIIB and there is no reasonable prospect of it being lifted (s 90K(1)(f))
- The agreement covers a superannuation interest that is unsplittable under Part VIIIB (s 90K(1)(g))
Section 90UM(1) sets out the equivalent grounds for de facto financial agreements. The wording is slightly different, but the legal principles are the same.
In practice, the eight grounds collapse into four working categories:
- Formal or procedural defects. The agreement does not comply with section 90G (independent legal advice and signed certificates).
- Vitiating factors at the time of signing. Fraud, duress, undue influence, unconscionable conduct, lack of mental capacity, family violence.
- Material change of circumstances after signing. Usually involving care of a child causing hardship under s 90K(1)(c) and (d).
- Drafting failures and lack of common intention. The agreement is void for uncertainty or fails to record what the parties actually agreed.
Courts take a strict approach. They will not set aside an agreement just because one party regrets it. The Full Court has been blunt about this:
As is not in doubt, the provisions of s 90K are not designed to, and do not facilitate a party escaping from what proves, or is perceived to be a bad bargain.
Core Point: Setting aside a financial agreement is not a discretion to revisit a bad bargain. You must prove that at least one specific statutory ground exists, such as fraud, unconscionable conduct, procedural non-compliance, or a major change in your circumstances involving children that causes real hardship.
Why does the timing of signing a financial agreement matter so much?
The closer a financial agreement is signed to the start of your relationship or marriage, the more vulnerable it becomes at separation. When you sign a deal in the early stages, you usually cannot predict the major life events of the next decade or two. The gap between who you were when you signed and who you are at separation creates a real risk of hardship and unfairness, and that gap is what gives the other party a statutory ground to challenge the agreement.
Three things tend to go wrong if you ignore the timing risk:
- The spouse in the weaker economic position may be locked into terms that no longer reflect reality. If you agreed to limited assets ten years ago, before you left work to raise children, that agreement may give you almost no protection at separation.
- You may end up in years of expensive litigation just fighting over whether the BFA is valid. These cases often involve a separate threshold hearing on the agreement before the court even reaches the property settlement.
- For families with children, the law is specifically designed to protect them. An agreement can be set aside many years after signing if a material change in circumstances relating to a child causes hardship to the child or the primary carer.
The High Court explained the underlying principle in 2025:
Unlike many classes of agreement, a financial agreement is also liable to be set aside on various grounds that relate to unknowable material changes in circumstances that have arisen after entry into the financial agreement, including circumstances relating to the care, welfare and development of a child of the marriage.
On 21 July 2005, Mr and Ms Daily signed a financial agreement under section 90B of the Family Law Act 1975 in the lead-up to their marriage later that year. At the time, the couple had no children and did not contemplate having any. The agreement was thin on detail and made no provision for what would happen if the family changed shape. Two children were born after the marriage, in 2006 and 2009. The parties separated in 2018 after 13 years together.
In 2019, Ms Daily applied to set the 2005 agreement aside. The Family Court did so on two grounds: the agreement was void for uncertainty, and the birth and ongoing care of the two children was a material change in circumstances causing hardship under section 90K(1)(d). Mr Daily then sued the lawyers who had drafted the 2005 agreement, claiming professional negligence had cost him a better property outcome.
Outcome: The 2005 agreement was set aside in 2019. In 2025, the High Court held that Mr Daily failed to prove the lawyers' conduct caused his loss, because no agreement drafted in 2005 could realistically have survived the later hardship challenge once children were born. The case is now the leading authority for the principle that BFAs signed early in a relationship are inherently vulnerable to being set aside on hardship grounds when caring needs later arise.
Key Point: A BFA is not a one-and-done shield. Major life changes after signing, especially the birth of children, serious illness, or large shifts in the asset pool, can give your former partner a statutory ground to ask the court to set the entire agreement aside.
How do courts approach the different grounds for setting aside?
This section walks through the three most common scenarios in practice: procedural defects, vitiating factors at signing, and material change of circumstances. Each scenario has its own evidence requirements and its own track record in the cases.
Scenario 1: Procedural and formal defects (no independent legal advice, sham witnessing)
Common Misconception: We both signed and got it witnessed, so it must be binding.
Legal Truth: Section 90G of the Family Law Act 1975 sets a high bar. Each person must receive independent legal advice from a separate lawyer about the agreement's effect on their rights and the advantages and disadvantages of signing. Each party must then receive a signed certificate from their lawyer confirming that advice was given, and the certificates must be exchanged. If the same firm effectively advises both sides, or if witnessing is a sham where a lawyer signs without seeing the client sign, the agreement fails the test and is not binding. Courts have a backup discretion under s 90G(1A) to declare an agreement binding despite technical defects, but they will not exercise it for a party who acted unfairly.
Near enough is not good enough and the Wife does not come to this Court with clean hands. The circumstances of the execution of the Agreement by the parties and their solicitors acting as witnesses is nothing short of diabolical. Any suggestion the Wife has a claim to the benefit of paragraph 90G(1A) is rejected.
The Pagani parties signed a financial agreement in June 2011, before their marriage. The wife held significant assets while the husband owned a property worth roughly $530,000. When the agreement was prepared, the schedules listing each party's assets and liabilities were left completely blank. Both lawyers signed as witnesses, but neither had actually seen their client sign the document. The husband never received advice on the final, executed version of the contract.
After the relationship broke down, the wife asked the court to declare the agreement binding so it would govern the property division. The husband resisted, arguing the agreement should be set aside because he had not received proper independent legal advice and because the blank schedules amounted to non-disclosure of his property. The wife asked the court to apply the s 90G(1A) discretion to save the agreement, accepting there were procedural defects but arguing it would be unjust to set it aside.
Outcome: The court found the agreement not binding and refused the wife's s 90G(1A) plea. Judge Myers held the wife came to court with unclean hands because she and her solicitor knew the schedules were blank yet pushed the document through. The case shows that the s 90G(1A) safety net only catches parties who have themselves acted fairly.
Practical advice for protecting the procedural integrity of your BFA:
- Use two completely separate law firms for each party's advice. Same-firm advice undermines the independence section 90G requires.
- Never sign an agreement with blank schedules or incomplete asset disclosure. Every asset and liability must be listed before anyone signs.
- Sign in the physical presence of the lawyer providing your certificate. Avoid any arrangement where the lawyer signs as a witness later.
- Keep originals of the signed agreement and both certificates of advice. Store them safely for the life of the relationship.
Scenario 2: Vitiating factors at signing (lack of capacity, family violence, undue influence)
Common Misconception: I signed it, so I am stuck with it.
Legal Truth: A signature is only legally meaningful if it was given freely by someone who understood the document. Where the agreement was obtained through duress, undue influence, or where one party lacked the mental capacity to understand the document, the court can set it aside on the basis that the agreement is void or voidable (s 90K(1)(b)). Where one party engaged in unconscionable conduct in connection with making the agreement, the court can also set it aside under s 90K(1)(e). Family violence has been argued, and accepted, as a vitiating factor that affects the fairness of formation.
The wife has, in respect of her application to set aside the BFA, pleaded instances and patterns of family violence alleged to have been perpetrated by the husband upon her. These matters are asserted to vitiate the BFA.
In January 2010, Ms Tey, then 36, moved to Australia and began living with Mr Muir, who was 85, in his home. On 19 February 2014, the parties signed what was put forward as a financial agreement under section 90UC of the Family Law Act 1975. The agreement was very simple: if the relationship broke down, all properties would be divided equally regardless of whose name was on the title. Mr Muir owned a home, and Ms Tey had recently arrived on a temporary visa. Shortly after signing, Mr Muir's health declined and he moved into a nursing home.
In May 2014, Ms Tey applied to enforce the agreement and recover her half share. Mr Muir was unable to act for himself, so his daughter became his case guardian. Mr Muir's legal team argued two things: first, that the parties had never been in a de facto relationship as defined in section 4AA, so the agreement was not capable of being a financial agreement at all; second, and more important, that Mr Muir lacked the mental capacity to enter the agreement on the day it was signed.
Outcome: The Full Court dismissed Ms Tey's appeal and upheld interim orders freezing the proceeds of the property until the capacity and de facto status questions could be tried. The judgment makes clear that where there is a serious dispute about capacity at signing, the court will preserve the asset pool rather than enforce the agreement before the question is resolved. The case shows that a BFA is not bulletproof when one party was vulnerable due to age, isolation, or declining health.
Practical advice if you suspect a vitiating factor existed at signing:
- Gather contemporaneous evidence. Old emails, text messages, diary entries, or letters that describe pressure or threats around the time of signing carry far more weight than later recollection.
- If capacity is in issue, obtain medical records and reports from doctors who treated the person around the date of execution. GP notes, hospital records, and specialist reports are often decisive.
- Document any history of family violence with police reports, intervention orders, court records, and statements from social workers or refuge staff. This evidence shows you were not in a position to negotiate freely.
- Consult a family lawyer as soon as you suspect the agreement was obtained unfairly. Delay can complicate proof and weaken your position.
- Identify witnesses. People who were present during negotiations or signing, or who saw the parties in the days before, can corroborate claims about coercion, capacity, or fear.
Scenario 3: Material change of circumstances causing hardship to a child or carer
Common Misconception: Once signed, the agreement is locked in regardless of what happens later.
Legal Truth: Under s 90K(1)(c) (impracticability) and s 90K(1)(d) (material change relating to a child causing hardship), genuine and significant changes can ground a successful set-aside application. But the bar is high. A drop in the value of an asset is not impracticability. A regrettable bargain is not hardship. The change must go to performance of the agreement or to caring responsibilities for a child.
As is not in doubt, the provisions of s 90K are not designed to, and do not facilitate a party escaping from what proves, or is perceived to be a bad bargain.
To see where the line sits, compare the two leading cases:
| Comparison | R Lawyers v Mr Daily [2025] | Sanger & Sanger [2011] |
|---|---|---|
| Trigger event after signing | Birth and ongoing care of two children | Significant drop in business and property values |
| Section relied on | s 90K(1)(c) and (d) | s 90K(1)(c) impracticability |
| Court's view of the change | Material change creating hardship to children and carer | Asset depreciation is a commercial risk, not impracticability |
| Outcome | Set aside (in 2019; confirmed by HCA in 2025) | Application refused |
Key: Courts will set aside an agreement for changes that go to caring for children or that make the agreement impossible to perform. They will not set it aside because the deal turned out to be financially worse than one party hoped.
The Daily case was analysed in the Why section above. The Sanger case is the counter-example, and shows what does not count as impracticability:
In 2007, Mr and Ms Sanger signed a financial agreement under which the husband agreed to pay the wife a lump sum of $350,000. At the time of signing, the husband expected that after making the payment he would retain about 40 percent of the asset pool. His expectation was based on agreed values of $400,000 for a company he owned and $750,000 for the former family home.
Sixteen months after signing, the husband's company went into voluntary liquidation and became worthless. The former family home then sold for $649,000, around $100,000 less than expected. The husband applied to set the agreement aside on the ground that performing the obligation to pay $350,000 was now impracticable, because doing so would leave him with almost nothing, far below his expected 40 percent share.
Outcome: The Full Court dismissed the husband's appeal and the agreement remained binding. The court held that the agreement required a fixed sum payment regardless of how the asset pool actually performed. By signing, the husband had accepted the risk that values might fall, just as the wife had accepted the risk that they might rise. A disappointing financial outcome is not the same as legal impracticability under s 90K(1)(c).
Practical advice when you want to argue material change:
- Frame your application around hardship to a child or to the parent caring for a child. Section 90K(1)(d) is where the court is most willing to intervene.
- Build concrete evidence of how caring responsibilities have shifted. School records, medical reports, evidence that one parent left work, and documentation of special needs all carry weight.
- Show clearly that the change was not anticipated when the agreement was signed. The original drafting and any contemporaneous correspondence are useful here.
- Avoid framing your case as buyer's remorse. The court will not help if the substance of the complaint is that the deal turned out to be a bad investment.
- Check whether performance is genuinely impossible. If a specific asset named in the agreement no longer exists, you may have a stand-alone case under s 90K(1)(c).
For the property settlement that follows once a BFA is set aside, see How Australian Courts Divide Property: The Four-Step Process. On the time limits that then apply, see How Long After Separation Can You Claim Property in Australia?. For when the court can refuse to make any property order at all, see Can the Court Refuse to Split Property in an Australian Divorce?.
Summary
Setting aside a Binding Financial Agreement is possible, but the path is narrow. You cannot simply walk away from a deal you regret. You must navigate one of the four statutory categories under section 90K and prove a specific ground exists.
Procedural integrity is non-negotiable. As Pagani & Pagani [2023] shows, the court will declare an agreement not binding if independent advice and witnessing requirements are treated as paperwork rather than substance.
Vulnerability at signing matters. Teh & Muir [2015] confirms that the court will freeze assets and investigate if there is a real dispute about whether one party had capacity to understand the document.
Children change everything. R Lawyers v Mr Daily [2025] confirms that an agreement made early in a relationship can be set aside if the birth of children creates hardship that the original document never contemplated.
A bad bargain is not enough. Sanger & Sanger [2011] shows that asset depreciation, market shifts, or financial regret do not amount to impracticability under section 90K(1)(c).
Clean hands is required to save a flawed agreement. Going back to Pagani & Pagani [2023], the court refused to use the s 90G(1A) discretion for a party who had herself relied on procedural shortcuts.
| Correct | Incorrect |
|---|---|
| Use two separate law firms for advice | Sign with the same firm advising both parties |
| Disclose all assets in full detail before signing | Leave schedules blank or hide assets |
| Sign in front of the lawyer providing your certificate | Sign elsewhere and ask the lawyer to witness later |
| Update the agreement after major life events (children, illness, asset shifts) | Assume one signing covers a lifetime |
| Build a contemporaneous evidence trail (medical, family violence, communications) | Rely on memory years after the fact |
| Frame an application around hardship to children or impossible performance | Frame it as a bad financial outcome you regret |
