Why You Should Know The Differences Between A Consent Order And A Binding Financial Agreement

Why You Should Know The Differences Between A Consent Order And A Binding Financial Agreement

Anyone going through a divorce has to contend with many issues, and invariably one of them is trying to understand all the legal jargon. For this reason, it is little wonder why most divorcing couples elect to have family lawyers represent them, who, presumably, know what all the terminology that exists within Australian family law means.

Some of the biggest confusions relate to the formal agreements and orders that exist within divorce law. Two of the primary ones are Consent Orders and Binding Financial Garments (BFAs) These confusions range from thinking they both have the same legal standing through to not having a clue what either of them is. Again, it is why family lawyers are there to help, and we want to help too, so keep reading and we will outline the differences between Consent Orders and BFAs.

What Are Consent Orders?

Family Court Consent Orders will comprise two separate documents which are sent to the Family Court. One will be the application and the other will be the minute of order. The latter will outline the salient points that have been agreed to by the two parties. The agreement will relate to the property settlement and will detail all the couple’s assets and liabilities plus what they agreed to, relating to the division of property. Parenting arrangements may also be included.

For the Family Court to approve the Consent Order, it must be satisfied that it is just and equitable to each party. If the court does approve it then the Consent Ordered becomes legally binding of both parties and normally, it cannot be amended. Note, a consent order application must be submitted within 12 months of a divorce, or two years after the end of a de facto relationship.

What Is A Binding Financial Agreement?

One of the major differences of a BFA has versus a consent order, is a BFA is filed out with and not subject to the approval of the Family Court. However, it must be drafted in accordance with family law, and this means that family lawyers should draft it. Should this not be done, or the BFA is not drafted properly, then it will not be enforceable.

Specifics within a BFA will include current assets and liabilities, and what the two parties have agreed to, concerning the division of their property. This is where another major difference to Consent Orders occurs because there is no obligation for a BFA to meet ‘just and equitable’ standards. Further, unlike a Consent Order that cannot be amended, one of the parties can, at a later date, object and challenge the BFA and declare that they no longer wish to be bound by its terms.

Consent Order Pros

  • Legally binding and thus enforceable
  • Provides certainty as they cannot usually be overturned
  • Usually costs less than BFAs
  • Streamlined court process
  • Can include parenting arrangements

Consent Order Cons

  • Requires lots of detail
  • Incurs a court application fee
  • Must illustrate a just and equitable division of assets

BFA Pros

  • Can be created easily
  • If both parties agree, it does need to meet ‘just and equitable’ standards
  • Can be signed at any time including whilst the couple are still together
  • No need for court and thus no court fees are payable
  • Does not need to deal with parenting arrangements

BFA Cons

  • Both parties must have legal representation
  • Not enforceable if not drafted correctly
  • Enforcement can be complicated and costly