Unfortunately, the enforceability of a premarital agreement is only determined at the time it becomes necessary – after one party files for divorce. However, if the agreement complies with the California Premarital Agreement Act (CPAA), it will be enforceable. The CPAA espouses a set of rules for premarital agreements executed post January 1, 2002. In order to comply with the CPAA, the agreement must be made voluntarily. This means that the parties must have consulted independent counsel or waived their rights to consult with independent counsel, had legal capacity to enter into the agreement, did not sign the agreement under duress, fraud, or undue influence, and waited at least 7 days before signing the agreement. Further the agreement must not be unconscionable or against public policy, and the parties must comply with disclosure requirements.
Independent Legal Counsel or Waiver
The party against whom enforcement is desired must be represented by independent counsel or must waive this right in a valid writing. The writing must be made separate and not included in the prenuptial agreement. Further, the independent counsel must have no conflicts – either with the parties or other attorneys or individuals who may benefit from the agreement. It is important that the unrepresented party choose an attorney of his or her choice, free from the influence of the other party’s counsel or anyone who works for the other side.
If a party waives the right to counsel, the party must be fully aware of the agreement’s provisions and his or her rights and obligations under the agreement. “Advice concerning the effect of the agreement must be memorialized in writing and the unrepresented party must acknowledge that he or she received it.” (Family Code § 1615 (c))
Fraud, Duress, Undue Influence
The court must find that the party did not act under duress, fraud, or undue influence, and that the parties had the capacity to enter into the agreement. (Id)
Fraud is the intentional misrepresentation or concealment of a material fact with the intent to deprive another party of a legal right. (Civ. Code, § 1572) Physical duress is when a party to the contract is threatened to enter the contract and only enters based on the threat from the other party. This threat is usually to the person’s well being. Economic duress involves a wrongful threat which is presented by one party to which there is no reasonable alternative but to enter the contract; that threat actually induces the making of the contract; and the other party is financially harmed as a result of making the contract.
The party must have at least seven calendar days between the date he or she was “first presented” with the agreement and advised to seek independent counsel at the time the agreement was signed. (Id)
The parties must provide “fair, reasonable, and full disclosure” of property and financial obligations and each must have had reasonable awareness and knowledge of the other’s financial obligations and property. (Id) If a party chooses to waives these disclosures, it must done so expressly in writing.
Unconscionability, Public Policy, and Other Factor(s)
If the agreement has oppressive or unfair terms that are so one-sided at the time the contract is made (or at time of enforcement for certain spousal support provisions), the contract is voidable as substantively unconscionable. However, if it is oppressive due to unequal bargaining power and surprise due to unfair and/or hidden provisions, then it is procedurally unconscionable. The premarital agreement must be both procedurally and substantively unconscionable to be invalidated. Furthermore, it may be upheld even if it contains unconscionable provisions but the parties complied fully with disclosure requirements. (Marriage of Bonds (2000) 24 Cal.4th 1, 15.) Public policy issues which will invalidate a premarital agreement include an agreement which encourages or promotes dissolution, or an agreement which provides for certain moral, social, or religious ideals to be upheld.
Lastly, even though not contained in the CPAA, a court may consider other relevant factors when dealing with validity and enforceability issues.