Binding Financial Agreements: When and How They Get Set Aside 

A Binding Financial Agreement (BFA) is designed to provide certainty and autonomy for couples managing their financial affairs after separation. However, not all binding financial agreements withstand legal scrutiny. Courts in Victoria can, and often do, set aside a Binding Financial Agreement if it fails to meet the stringent requirements of the Family Law Act 1975 (Cth).

If you are concerned about the validity of your agreement or believe it was signed under unfair conditions, it is crucial to understand how and why a binding financial agreement can be invalidated in Victoria. Below, we examine the legal grounds on which courts may declare a BFA unenforceable — and why precision and fairness are paramount. 

When Can a Binding Financial Agreements Be Set Aside in Victoria? 

A Binding Financial Agreement (BFA) allows couples—married or de facto—to determine how assets, debts and spousal maintenance will be handled if they separate. It functions as a private contract designed to reduce conflict and avoid court involvement in property settlement matters. 

However, despite its “binding” label, a BFA is not immune from challenge. Under sections 90K and 90UM of the Family Law Act 1975 (Cth), a court may set aside a financial agreement if it finds that one or more legal or equitable grounds exist — such as fraud, duress, lack of disclosure, or significant changes affecting fairness. 

When this occurs, the agreement becomes void, and financial issues are instead resolved through property settlement lawyers in Melbourne who can assist in achieving a fair outcome. 

Below are the key legal grounds on which a court may declare a BFA unenforceable in Victoria. 

1. Fraud, Misrepresentation, or Non-Disclosure 

The first and most fundamental ground for setting aside a BFA is fraud — which can include deliberate dishonesty, partial disclosure, or concealment of assets. 

If one party hides financial information, undervalues assets, or misrepresents income when the agreement was made, the court may find the contract was entered into under false pretences. Fraud does not require malicious intent; even an omission or failure to update information before signing can be sufficient. 

Because BFAs rely on full and frank disclosure, any deception undermines their foundation, leading the court to declare the BFA unenforceable in Victoria. 

2. Duress, Undue Influence and Unconscionable Conduct 

A BFA must be entered into voluntarily and freely. If one party was coerced, pressured, or emotionally manipulated into signing, the court may deem the agreement invalid. 

Examples include: 

• Threats to cancel a wedding unless the agreement is signed; 

• Presenting the document shortly before marriage, leaving little time for review; or 

• Exploiting a partner’s emotional dependence or limited understanding. 

This falls within duress or undue influence, both of which invalidate consent. Similarly, unconscionable conduct occurs when one party exploits another’s vulnerability — such as illness, distress, or lack of legal understanding — to gain an unfair advantage. 

In these circumstances, the court’s response is clear: to set aside the binding financial agreement and prevent injustice. 

3. Absence or Inadequacy of Independent Legal Advice 

The Family Law Act mandates that both parties receive independent legal advice before signing a BFA. Their lawyers must confirm in writing that advice was given regarding: 

• The effect of the agreement; and 

• The advantages and disadvantages of entering into it. 

Failure to meet this requirement — or evidence that advice was inadequate — may render the BFA unenforceable. Courts scrutinise whether the legal advice was genuine and adequately explained the agreement’s implications. 

If one party signs without understanding what they are giving up, the agreement can be invalidated in Victoria for want of informed consent. 

4. Non-Compliance with Statutory Formalities 

A BFA must comply with the Family Law Act: 

• It must be in writing, 

• Signed by both parties, and 

• Accompanied by certificates confirming independent legal advice. 

Even minor procedural errors — such as missing signatures or absent certificates — can be fatal. Courts consistently rule that strict compliance is essential. 

Where formalities are not met, the court may declare the binding financial agreement set aside and proceed as though it never existed. 

5. Material Change in Circumstances Affecting Children 

The court can set aside a BFA if there has been a significant change in circumstances relating to the care, welfare, or development of a child, and if enforcing the agreement would cause hardship. 

For instance, a child’s unexpected medical condition, disability, or financial dependency may alter the fairness of the agreement’s terms. No private contract should compromise the best interests of a child. 

When such hardship is shown, the court prioritises equity and may invalidate the BFA to ensure fairness considering new realities. 

6. Impracticability or Frustration 

Sometimes, despite good faith, a BFA becomes impossible or impracticable to perform. For example: 

• Assets mentioned no longer exist; 

• A business collapses; or 

• External events make compliance unreasonable. 

In such cases, the agreement may be set aside, as enforcing it would be futile or unjust. This principle parallels contractual frustration in general law. 

7. Void, Voidable or Inequitable Agreements 

Even if none of the statutory grounds apply, the court can rely on equitable doctrines to invalidate a BFA. If the agreement is void for mistake, misrepresentation, or lack of true consent, it may be set aside. 

If one party misunderstood a key term or was misled about its effect, there may be no “meeting of minds,” making the contract voidable. Courts also consider fairness: if enforcement would cause injustice, the BFA can be struck out to restore equity. 

These principles ensure that a BFA unenforceable (VIC) is not just technically flawed but also fundamentally unfair. 

How the Court Assesses Applications to Set Aside a BFA 

Applications to set aside a binding financial agreement are made to the Federal Circuit and Family Court of Australia (FCFCOA). The applicant bears the burden of proving one or more of the statutory grounds under the Family Law Act 1975 (Cth). 

The court evaluates: 

• The circumstances of the agreement; 

• The conduct and knowledge of each party; 

• The adequacy of legal advice; and 

• Whether enforcement would cause hardship or injustice. 

If satisfied, the court may declare the agreement void and make new financial orders consistent with property settlement in Victoria principles. 

For professional guidance on achieving a fair division of assets after a BFA is set aside, explore our Property Settlement services. 

Minimising the Risk of Invalidation 

Although this article focuses on invalidation, prevention is best. To reduce risks, parties should: 

• Obtain comprehensive, independent legal advice; 

• Exchange full financial disclosure; 

• Avoid pressure tactics or rushed execution; and 

• Review the agreement after major life changes. 

A properly executed BFA reduces the chance of being set aside by the court, ensuring both fairness and enforceability. 

Frequently Asked Questions (FAQs) 

Speak to an Experienced Family Lawyer 

A binding financial agreement can be a valuable tool in managing financial arrangements—until it is not. When fairness, consent, or compliance are in question, courts will intervene. 

If you suspect your BFA may be unenforceable or want advice on setting one aside, contact Pentana Stanton Lawyers. Our experienced family law and property settlement team can assess your agreement, identify potential invalidity risks, and guide you toward the most strategic outcome.