Sally Nash's latest blog on Pre-nuptial agreements - Fair and Reasonable?

We have blogged about Pre-Nuptial Agreements at Gilson Gray before.  In Scotland, they are becoming increasingly common.  In terms of enforceability, our family law legislation specifies that an Agreement between two spouses/civil partners dealing with what is to happen in respect of finances in the event of a separation can be set aside in the context of a divorce or dissolution action, but only if it can be established that the Agreement was unfair and unreasonable at the time it was entered into.

Scots lawyers regularly speak about the respect that our legal system affords to two adults to contract to do whatever they want, providing they have the requisite capacity.  Whilst Pre-Nuptial Agreements have not in fact been properly tested under our current legislation, the general thinking is that whilst a court may, in assessing fairness and reasonableness, give consideration to whether the outcome of the Agreement is fair, previous case law regarding separation Agreements has made clear that just because an Agreement produces an unfair result does not mean that it was unfair and unreasonable at the time it was entered into.

If and when a Pre-Nuptial Agreement is considered by a court under our current legislation, it is expected that much of the focus will be upon the circumstances surrounding the entering into of the Agreement, rather than necessarily the terms of the Agreement itself. This will include, for example, whether both parties had ample opportunity to consider the terms of the Agreement and whether they were advised to take independent legal advice on its terms. A Pre-Nuptial Agreement presented to the bride the day before the wedding under the proviso of “no Pre-Nup; no wedding” is unlikely to stand up in court!

However, there has been some recent tabloid coverage on a rather unusual Pre-Nuptial Agreement, which I think would certainly test the leeway given by the Scottish courts in terms of freedom to contract.  According to the press stories, the Pre-Nuptial Agreement in question contained a number of rather interesting clauses.  These included:-

• An infidelity clause such that if the wife cheated, there would be no financial provision;
• Additional funds for the wife for each child that was born;
• A weight loss clause so that the wife required to lose at least 30lbs of any pregnancy related weight gain in the first year following childbirth (although the coverage does not specify what impact that was to have on the wife’s financial provision should she fail in that goal!)

The bride to be was apparently looking for advice on Reddit.  I will come back to the wisdom of that below!

Interestingly, she apparently commented that the clause that she found the oddest was the clause regarding “compensation for children”.  From the examples given, and from a Scottish perspective, it seems to me that was one of the most standard clauses.

To put this in context, the vast majority of Scottish Pre-Nuptial Agreements simply look to extend the ring-fencing protection already offered by our legislation in respect of pre-marital, gifted from third party and inherited assets. Our legislation provides that such assets are preserved as non-matrimonial (and therefore not generally available for division) for as long as the asset remains in the same form.  In other words, if the asset concerned was sold during the course of the marriage and a new asset purchased in its place, the new asset would be up for grabs. Often, Scottish Pre-Nuptial Agreements look to extend the ring-fencing protection to assets deriving from the ring-fenced assets.  However, that extension can sometimes mean that no, or very little, matrimonial property will be created for the other person to share in. In those situations, specific provision for the less wealthy party will sometimes form a part of the Agreement.

If specific provision is to be made, it is not uncommon to see additional provision being made in the event that there are children of the marriage.  The logic of this is in many cases sound – if there are children of the marriage, then what the parent of that child would need in the event of the marriage coming to an end may inevitably be more.  There are all sorts of counter-arguments to this – for example, do we punish the bride who marries in her 20s with every intention of having children but, for reasons out with her control ,cannot?  Frankly, these discussions are often a minefield but to my mind this is by no means the most unusual clause in this particular Agreement!

Unfortunately, a lot of coverage of Pre-Nuptial Agreements comes with this sort of narrative; and quite often from the United States.  There, clauses specifically tying financial provision to things such as infidelity are certainly a lot more common than they would be in this jurisdiction.  In my work as a practitioner dealing with cross border matters including with the United States, I have seen first-hand Pre-Nuptial Agreements with infidelity provisions similar to those described in relation to this Agreement. I can’t say however that I have ever seen a Pre-Nuptial Agreement with a weight loss clause!

Putting to one side the “compensation for children” aspects therefore (which frankly I do think in an appropriate context a court would consider to be wholly fair and reasonable), the question then arises over the infidelity and “weight loss” provisions and whether a Court would consider that an Agreement containing such provision was fair and reasonable at the time it was entered into.

For me, the weight loss provision is the easier of the two to consider.  I cannot imagine any circumstances in which a Scottish court would consider such provision to be fair and reasonable – beyond anything else there could be medical circumstances which prevent this being achievable.

Infidelity is however a more interesting question – after all, if you sign up to an Agreement which specifies that no financial provision is the consequence of infidelity, and of course being unfaithful or otherwise is within that individual’s control; then is there an argument that someone should be held to those terms?  I think that in Scotland the answer is probably “it depends”, but most likely not.  This is for two reasons.  First of all, one of the bedrocks of Scots Family Law is that behaviour does not impact upon financial provision except in extreme circumstances such as one party’s gambling habit depleting the parties’ assets. To allow such a provision to stand would ride roughshod through one of the fundamental principles of family law in Scotland.  The other issue is that infidelity is not necessarily always that clear cut.  If one spouse had a one off lapse in judgement after years of repeated philandering on the part of the other spouse, would it then be fair in those circumstances for his or her financial entitlement to be wiped out?  In my view, infidelity provisions could potentially be too qualitative to easily judge and that is therefore a further reason for doubting whether this would stand if a Scottish court were faced with such an Agreement.

The last point of note regarding this bride-to-be’s Pre-Nuptial journey was that the Agreement has apparently been prepared, and handed to her shortly before the wedding, by her father-in-law.  Those advising on the forum urged her to take independent advice from a qualified lawyer on the terms of the Agreement.  It cannot be emphasised enough that Pre-Nuptial Agreements can be tricky. Advice not only from someone independent, but someone who is highly experienced in dealing with Agreements of this nature is absolutely essential.