Domestic Contracts in Ontario
The legislative framework set out in the Family Law Act provides a default scheme for the ordering of a couple’s affairs upon the dissolution of their relationship. The legislation, however, acknowledges that some parties may wish to regulate their own affairs and allows for this under Part IV of the Act through provisions respecting domestic contracts.1 In contrast to the default legislative framework, whose focus is the breakdown of a couple’s relationship, domestic contracts may deal with a couple’s relationship at various stages. There are three types of domestic contracts: marriage contracts; cohabitation agreements; and separation agreements.2 Common to all domestic contracts are the requirements that they be in writing, signed by the parties to the contract and witnessed. Additionally, typically only those who are mentally capable and 18 years or older are recognized as possessing the requisite capacity to enter into the contract.
Marriage Contracts
Marriage contracts may be entered into between persons who are married to each other or who intend to marry and deal with the rights and obligations of the persons during the marriage and/or on separation. More specifically a marriage contract may determine questions respecting the ownership and division of a couple’s property and spousal support obligations. A marriage contract may not however deal with custody and access to children. Rights respecting the matrimonial home, such as whether it may be excluded from the calculation of the equalization payment (see Marriage and the Division of Assets for greater discussion of this topic) or ownership of the matrimonial home can be dealt with in a marriage contract. The rights of possession of a matrimonial home that a spouse enjoys under Part II of the Family Law Act, however, cannot be limited by a marriage contract.
Cohabitation Agreements
In accordance with s.53 of the Family Law Act, only those who are not married to each other and who are cohabiting or who intend to cohabit may enter into a cohabitation agreement. Cohabit is defined under s.1(1) of the Act as living together in a conjugal relationship, whether within or outside marriage. The matters dealt with in a cohabitation agreement are similar to those found in marriage contracts. If the parties to the cohabitation agreement marry, the agreement will by force of law become a marriage contract.
Separation Agreements
By far the most common domestic contracts negotiated between couples are separation agreements. In order for two persons to enter into a separation agreement they must have cohabited and must now be living separate and apart. A common indicator that a couple is living separate and apart, is that they no longer live in the same residence. However, couples who continue to live under the same roof may still be found to live separate and apart based on the fact that they are living independent lives.
Unlike marriage contracts and cohabitation agreements, separation agreements can provide for custody and access to children in addition to all the rights and obligations that can be dealt with under those contracts. A court may nonetheless disregard such provisions in a separation agreement in accordance with s.56 (1) of the Act where it is in the best interest of the child to do so.
Setting Aside Domestic Contracts
Application may be made to a court for the setting aside of a domestic contract in one of the following three instances: 1) a party has failed to disclose to the other significant assets or debts that existed at the time the contract was entered into; 2) a party did not understand the nature or consequences of the contract; or 3) for general reasons at contract law such as undue influence, mistake, etc.3
Due to the court’s power to set aside agreements, parties should be wary of concluding agreements where financial disclosure has been scant or non-existent as well as situations where one party refuses to obtain independent legal advice respecting his or her rights and obligations under the contract.
It should be noted that a court may set aside support provisions or a waiver of support in a contract, under the authority granted it in accordance with s.33 of the Act. A court may exercise its authority under this section if: the waiver or the provision results in unconscionable circumstances; the waiver or provision means that the prospective recipient must instead depend on public assistance; or if there is a default in the support payment.
1The reader is referred to the Family Law Act, R.S.O. 1990, c.F.3 as am, ss.51-60. (Back)
2See Family Law Act, s.51 (Back)
3See Family Law Act, ss. 56(4) (Back)
