Domestic Contracts 101
The term “domestic contract” is used in the Ontario Family Law Act (FLA) to cover a wide variety of agreements between partners, parents, and spouses.
What many people may not recognize is that domestic contracts are subject to certain rules around how they are made, what they can apply to, and how they can be overridden, changed, or terminated.
Couples usually find this out the hard way, after trying to do their own negotiating and drafting because they want to avoid having to pay a lawyer to do it. Unfortunately, these well-intentioned Do-It-Yourself attempts often go wrong and end up creating legal problems that cost time and money to resolve.
Here is a brief primer on the topic of domestic contracts under Ontario law.
- A “domestic contract” is a defined concept. Under the FLA, it means any of the following:
- a marriage contract,
- separation agreement,
- cohabitation agreement,
- paternity agreement or
- family arbitration agreement.
- Each of these sub-types is subject to certain legislated rules. For example, a “cohabitation agreement” is defined by the FLA to be an agreement entered into by “two persons who are cohabiting or intend to cohabit and who are not married to each other.” The agreement can cover their respective rights and obligations during cohabitation or after they stop doing so, and can include topics such as:
- ownership in or division of property,
- support obligations,
- the right to direct the education and moral training of their children, but not the right to custody of or access to their children, and
- any other matter in the settlement of their affairs.
Plus, if two people have a cohabitation agreement and they end up getting married, it gets converted into a marriage contract.
Each of the other categories of domestic contract (listed above) is also subject to detailed rules.
- There are prescribed rules around how they are made and enforced. Specifically:
- A domestic contract has to be in writing, signed by the parties, and witnessed.
- A domestic contract that deals with a matter that is also dealt with in the FLA prevails over that legislation, unless the FLA provides otherwise.
- A minor (i.e. someone under the age of 18) can enter into a domestic contract, subject to the court’s approval either beforehand, or after it is made.
- A domestic contract can be filed with the court by one of the parties to it. Once this is done, it can be enforced, varied, or recalculated as it relates to financial support or maintenance of the adult partners.
- Provisions can be set aside or overridden. No matter what the couple may intend, the court has certain power to set aside the provisions of their domestic contract in prescribed circumstances. For example:
- A court can set aside a domestic contract if one of the parties failed to disclose significant assets, debts, or liabilities that existed when the contract was made, then the court can set the contract aside.
- A provision in a domestic contract between parents that relates to a child’s custody/access, education, or moral training can be disregarded by a court if doing so is in the best interests of the child, in the court’s opinion.
- Likewise, a provision in a domestic contract between parents that relates to a child’s support can be disregarded or overridden if it is unreasonable having regard to the Child Support Guidelines.
With these essential points around domestic contracts in place, in an upcoming blog, we will take a closer look at some interesting cases in which these provisions were examined or clarified by the courts.