Domestic Agreements are an important tool for resolving disputes between spouses in both a marriage and common law relationships.  Generally, there are three types of domestic agreements which are discussed below.

Separation Agreement

This is a contract between the parties when their marriage or a common law relationship comes to an end.  Although a separation agreement is not required to be considered living separate and apart it is a good idea to have one as it details your agreement pertaining to the issues of your separation, which may include:

• child custody, access, and guardianship issues;
• support payments;
• which party gets the family home;
• division or property;
• payment of family debt.

Separation agreements can be used at any time that the parties are willing to negotiate the terms of their settlement.  Separation agreements allow parties the flexibility and control to make their own agreements and are generally far less expensive than obtaining a court order.

A separation agreement is considered to be a final settlement, and therefore the parties should consider all the future possibilities prior to executing the separation agreement.  Although these agreements can be set aside courts, generally enforce these agreements provided they are fair (the parties obtained independent legal advice) and no material misrepresentations have been made.

There are provisions in the Family Relations Act that allow the court to vary a separation agreement in limited circumstances which generally involve issues of fairness.  Meaning that the courts will attempt to uphold the parties contractual intentions unless there is some evidence that a party did not execute the contract with their own free will, or they did not have full knowledge of its terms.  Obtaining independent legal advice is very important to ensure the enforceability of a separation agreement.

Where parties are prepared to resolve their disputes a separation agreement is an inexpensive and effective alternative to litigation.

Marriage Agreement

This is a contract made either at the beginning of a marriage or in contemplation of marriage.  These are commonly known as a pre-nuptial agreement. 

These agreements typically are intended to resolve the issues arising on the event of marriage breakdown.  Sometime marriage agreements can also address how the day to day issues are to be addressed.

The Family Relations Act allows people to use a marriage agreement to provide for management of assets and division of property.  In this way couples can contract out of the statutory provisions pertaining to the division of property and assets upon marriage breakdown.

Marriage agreements are ideally suited to people who have significant assets when they marry or when they anticipate that they will inherit significant assets during their marriage.  A marriage agreement is generally not necessary where parties have no significant assets or prospect of inheritance at the time of marriage.

Generally speaking, the courts will uphold an agreement and bind parties to their contractual intentions.  However, the courts will not enforce an illegal agreement such as contracting out of child support.

Upon the event of marriage breakdown the Family Relations Act does provide a provision allowing judicial review and reapportionment.  The Supreme Court of Canada has held that a marriage agreement is fair if the parties have full knowledge of the terms when they entered it and the parties intend it to apply to the circumstances that exist at the time the agreement was made. 

It is important for parties to have independent legal advice and enter the agreement as far in advance of marriage as possible.

Cohabitation Agreements

This is a contract made by parties who are not married but are living together as spouses.  These agreements typically address how property will be divided, payment of support, and often include the payment of household expenses and management of housework.

The Family Relations Act provides that two people not married to each other (including same gender) in a marriage-like relationship for at least 2 years are responsible to each other for the maintenance and support of the other having regard to, amongst other things, an implied agreement.

Cohabitation agreements are typically entered in the following circumstances:

• the relationship is expected to be lasting;
• one spouse has a much larger income or assets than the other;
• one or both spouses have significant debt ;
• one or both of the spouses have significant assets entering the relationship;
• there is an expectation of an inheritance;
• children are involved or the couple intends on bring children into the relationship.

 Although the Family Relations Act provides that only married couples can apply for division of property under the Act the law is clear that the other spouse may make a trust claim of the assets owned by the other spouse.  The non-owning spouse must satisfy the court that he or she has made contribution to the asset, and to deprive them of the asset and the depreciation of the asset would be unjust.

In addition, the Family Relations Act provides that where unmarried couples have entered a cohabitation agreement, they may apply for a court order for division of assets that is different than what the agreement provides just as if the couple entered a marriage agreement.  Therefore it opens up the possibility that with a cohabitation agreement a claim may be made against all the assets if the agreement dealt with division of property.  In other words, without a cohabitation agreement a party may have narrow claim to an asset and with the cohabitation agreement their claim is much broader.  As a result, cohabitation agreement may not be appropriate where the whole point of the agreement is to avoid sharing assets.  

As with all family agreements, it is strongly encouraged that the parties obtain independent legal advice.  With the implications of trust law and the Family Relations Act it is especially important to get legal advice when considering a co habitation agreement.