Most articles about Binding Financial Agreements (BFAs) in Australia focus on how to create one.
Very few explain what actually causes BFAs to collapse years later — after children, illness, business growth, or career sacrifice.
Yet this is exactly when disputes arise.
This guide explains the real-world failure points Australian courts focus on, and how properly drafted BFAs anticipate life changes instead of pretending they won’t happen.
The Biggest Myth About BFAs
The most dangerous belief is this:
“If we both signed it, it must be binding.”
That is not how Australian family law works.
Courts don’t just ask what was signed.
They ask whether the agreement still operates fairly given what actually happened afterward.
The Silent BFA Killer: Unanticipated Life Changes
Most BFAs that fail do so years after signing, when circumstances change in ways the agreement never addressed.
Common triggers include:
- One party leaving the workforce to raise children
- Chronic illness or disability
- A business exploding in value
- One partner funding the other’s career
- Migration, relocation, or visa dependency
- One-sided debt accumulation
If the agreement does not contemplate these scenarios, it becomes vulnerable.
Courts do not require perfection — but they do require foresight.
Why “Fair at the Time” Isn’t Enough
A BFA can be technically valid and still be set aside if enforcing it later would be unjust or unconscionable.
Courts look at:
- Whether one party was left without realistic financial capacity
- Whether contributions changed dramatically over time
- Whether one party assumed disproportionate care responsibilities
- Whether enforcement would create serious hardship
BFAs that assume a static life are the easiest to attack.
The Difference Between Asset Protection and Financial Control
This is where many agreements go wrong.
Asset protection is legitimate.
Financial control is not.
Red flags courts look for include:
- No review clauses
- Absolute exclusions regardless of children
- No recognition of non-financial contributions
- Pressure to sign without negotiation
- Agreements drafted solely for one party’s benefit
A strong BFA protects assets without stripping dignity or security.
Review Clauses: The Feature Most Firms Skip
One of the most powerful protections in a BFA is a review trigger clause.
These don’t weaken agreements — they strengthen them.
Common review triggers include:
- Birth of a child
- Serious illness
- A party leaving the workforce
- Business valuation milestones
- A long marriage threshold
Courts view review clauses as evidence of fair process and foresight.
Why Independent Legal Advice Is More Than a Formality
Independent legal advice isn’t just a legal requirement — it’s a risk audit.
Courts examine:
- Whether advice was personalised
- Whether risks were actually explained
- Whether alternatives were discussed
- Whether the disadvantaged party understood consequences
Generic or rushed advice is one of the most common reasons BFAs unravel.
What High-Quality BFAs Do Differently
Strong BFAs typically:
- Contemplate multiple future scenarios
- Explain why certain outcomes are agreed
- Balance certainty with flexibility
- Include review or adjustment mechanisms
- Demonstrate genuine negotiation
- Reflect real-life decision-making
They read like thoughtful planning documents — not defensive contracts.
When BFAs Are Still the Right Choice
Despite the risks, BFAs remain extremely powerful when done properly.
They are particularly valuable for:
- Second marriages
- Blended families
- Business owners
- Large pre-relationship asset gaps
- Expected inheritances
- High-income disparity relationships
The key is precision and foresight, not shortcuts.
Final Insight Most Lawyers Won’t Say
The strongest BFAs are not the most aggressive ones.
They are the ones a court can read years later and say:
“This agreement anticipated life honestly.”
That is what keeps them standing.
Thinking About a Binding Financial Agreement?
Adams United Lawyers provide:
- Fixed-fee Binding Financial Agreements
- Independent legal advice and reviews
- National service
- Agreements designed to survive real life, not just signing day
If you want certainty that lasts, the quality of the agreement matters more than the cost.
T: 1800 407 792
E: kadams@adamsunited.com.au
