Key takeaway: A binding financial agreement is a private contract under the Family Law Act that sets out how property and finances are divided. It can be made before, during or after a relationship. For it to be binding, each party must receive independent legal advice. BFAs offer flexibility and privacy but can be set aside for non-disclosure, fraud or duress — so they must be drafted carefully.
What is a binding financial agreement?
A binding financial agreement (BFA) is a private, written contract between partners that determines how their property, finances and sometimes spousal maintenance will be dealt with. Unlike consent orders, a BFA isn't approved by a court — it's an agreement the parties make between themselves under the Family Law Act 1975.
That privacy is a major attraction: there's no court scrutiny of the terms, and nothing becomes part of the public record. But it comes with a trade-off — the validity requirements are strict.
Considering a financial agreement? We'll help you get one that actually holds up. Book a consultation.
Book a free consultation →Prenups, during, and after separation
A BFA can be made at three points, and the popular names follow:
- Before a relationship or marriage — commonly called a "prenup". It sets expectations before assets are intermingled.
- During a relationship — useful when circumstances change, such as an inheritance or starting a business.
- After separation — a "postnup", used to finalise the split as an alternative to consent orders.
The same agreement type is available to married and de facto couples alike.
What makes a BFA legally valid?
This is where most BFAs succeed or fail. For a binding financial agreement to be enforceable:
- It must be in writing and signed by both parties.
- Each party must receive independent legal advice — separately, from their own lawyer — before signing.
- Each lawyer must provide a signed statement confirming that advice was given.
- There must be full financial disclosure — hiding assets is fatal to a BFA.
- It must not be signed under duress or undue pressure.
BFA vs consent orders
| Feature | BFA | Consent orders |
|---|---|---|
| Approved by a court? | No — private contract | Yes — court-approved |
| Independent legal advice required? | Yes, for both parties | Not required |
| Privacy | High — stays private | Filed with the court |
| Can be made before a relationship? | Yes (prenup) | No |
| Typical cost | Higher (two lawyers) | Lower |
| Court tests fairness? | No | Yes (just and equitable) |
Not sure which suits you? Our dedicated comparison breaks it down: BFA or consent orders? →
Choosing between a BFA and consent orders is a judgment call. Let us help you pick the right one.
Book a free consultation →The risks and how to avoid them
BFAs are powerful but fragile if done poorly. The main risks: inadequate independent advice, incomplete financial disclosure, signing too close to a wedding (which can suggest pressure), and poorly drafted terms that don't anticipate future change. The way to avoid all of them is careful drafting and genuine, unrushed independent advice for both parties.
When can a BFA be set aside?
A court can set aside a binding financial agreement in defined circumstances, including: fraud or non-disclosure of a significant asset; the agreement being signed under duress or undue influence; impracticability (circumstances have changed so much it can't be carried out); or where a material change relating to the care of a child would cause hardship. The Federal Circuit and Family Court of Australia oversees these applications. Done properly, though, BFAs are difficult to overturn — which is the point.
Is a BFA right for you?
A BFA suits people who want maximum privacy and flexibility, who are protecting pre-existing or expected assets (a business, an inheritance), or who want certainty before entering a relationship. If you simply want to finalise a separation, consent orders are often simpler and cheaper. Mediation can help you reach the underlying agreement either way. See financial agreements mediation →