What You Need to Know About Domestic Contracts

There are several types and conditions surrounding domestic contracts. Our three-part series discusses the types of domestic contracts available, how to enforce them, and how to amend them.

This post outlines cohabitation agreements, marriage contracts, separation agreements, and their formal requirements.

The second will be a discussion on the enforceability and effect of these three types domestic contract.

The third and final post in this series will provide information on when these domestic contracts can be set aside or amended.

Please note the following is not legal advice. If you have any questions about domestic contracts or wish to enter one please contact the Loucks Law office.

Why Use A Domestic Contract?

Domestic contracts are a helpful and cost-effective way for parties to amicably separate.

They allow the parties to come to an agreement on their own and avoid the court process, which can be costly and time-consuming.

Three of the most common are:

• cohabitation agreements
• marriage contracts
• separation agreements

 

When Do You Enter a Domestic Contract?

Rights under the Family Law Act arise at different points in the relationship.

For example, spousal support rights may arise after a couple has cohabited for a period greater than 3 years, whereas rights to equalization of net family property do not arise until the couple is married.

As such, parties enter into domestic contracts once rights and obligations under the Family Law Act become applicable. What type of domestic contract parties enter into depends on their relationship status at the time they enter the agreement.

Parties who are not married enter into a cohabitation agreement when they are living together or intend to live together.

Marriage contracts are entered into by parties who are married or who intend to marry. If the parties entered into a cohabitation agreement and then later get married, the cohabitation agreement automatically becomes a separation agreement.

Lastly, separation agreements are entered into by parties who lived together (married or unmarried) and are now living separate and apart.

 

What Does a Domestic Contract Cover?

Cohabitation agreements and marriage contracts set out each parties’ respective rights and obligations during the relationship, upon the breakdown of the relationship, or death.

The Family Law Act provides that these domestic contracts can outline ownership and division of property, support obligations, rights to direct their children’s education, rights to custody and access of their children, and any other matter in the settlement of the parties’ affairs.

Separation agreements set out these same rights and obligations, however, since they are entered into once the parties’ relationship has ended, they do not deal with the parties’ rights and obligations during the relationship.

 

What Makes a Domestic Contract Valid?

In order for a domestic contract to be valid, it must be made in writing, signed by both parties and witnessed. If these requirements are not met, the contract will not be enforceable.

Generally, if a party is a minor or is mentally incapable, they cannot enter into a contract.

However, subject to obtaining court approval, a minor may enter into a domestic contract.

As well, subject to the court’s approval, a person who is mentally incapable may be a party to a domestic contract by their guardian of property or an attorney under a continuing power of attorney for property entering the contract on their behalf. However, the guardian or attorney cannot be his or her spouse.

Without the court’s approval, a domestic contract with a minor or a mentally incapable person as a party is not enforceable.

Our next blog post will discuss the enforceability and effect of these three types domestic contract, while our third and final post in this series will provide information on when these domestic contracts can be set aside or amended.