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When is an agreement reached between separating spouses a binding agreement?

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With many couples now starting divorce proceedings without solicitors, there are many couples that are able to reach agreement regarding their matrimonial finances directly. Solicitors encourage parties to discuss their finances together where possible to avoid costly and lengthy court proceedings. Discussions between couples take place at home, over dinner, over email, over text messages or just a general chat.

The question is, at what point is an agreement binding and when can your spouse be held to the agreement if they later attempt to withdraw from it? At what point does the court determine when an agreement is capable of being binding?

If you reach an agreement with your spouse directly and wish to be bound by the terms of that agreement, it is advisable to have those terms formalised in a consent order and approved by a Judge at which point the agreement is legally binding. However, what happens if one party decides he/she is no longer happy with the agreement reached before it is formalised by way of a consent order? In these circumstances, a court may hold that you and your spouse have created an Xydhias agreement during the negotiations. An Xydhias agreement is where the court could insist on formalising an agreement one party has reached directly with their spouse even where one party decides they do not wish to follow the agreement any longer.

An Xydhias agreement derives from a case Xydhias v Xydhias [1991] 1 FLR 683. The case involved a husband and wife who reached an agreement through solicitors prior to a three day final hearing. Before the hearing, the wife’s solicitors informed the court that agreement had been reached and there were just a few minor drafting points to be agreed. The wife’s solicitors prepared a ‘Heads of Agreement’ setting out the terms reached and agreed that the three-day final hearing would be replaced with a short directions hearing. At the hearing, the husband expressed his unhappiness with the agreement and wanted to proceed to a full trial. The wife then issued an application for the husband to “show cause” (i.e. demonstrate) why he should not be bound by the agreement. The Court of Appeal found in her favour. The Judge was satisfied that the parties had reached an agreement and made clear that parties cannot rescind from agreements over minor points, such as drafting or agreeing wording.

The court has a wide discretion in family law cases and have made clear in the Xhydias case that normal rules of contract law do not apply to family law. The courts will look at cases individually to determine whether parties have reached agreement or not. If the court finds that parties have willingly entered into an agreement and understand the consequences that flow, they may be bound by such agreement. It is much more likely that the Court will hold the parties to an agreement reached if they have had the benefit of legal advice, rather than simply reaching agreement directly between themselves, without any legal advice even behind the scenes.

It is therefore advisable that once you reach an agreement with your spouse, you instruct your solicitor to set out the agreed terms by way of a ‘Heads of Agreement’. This will set out clearly the terms which have been agreed and will avoid the other party withdrawing from the agreement at a later stage. If the other party does attempt to withdraw from the agreement before it is sent to the court, there are ways to hold that party to the agreement.

Rayden Solicitors are family law experts and can assist you on the topics raised in this blog. Please do not hesitate to contact us if you would like further information or assistance.

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