The purpose of a Contracting Out Agreement – also known as a “Pre-Nup” – is to contract out of the law, and make your own rules about how property will be divided in the event your relationship ends (on separation or death).  They are far more common these days, but the need to regularly review them over the course of time is often overlooked. 


Signing a Contracting Out Agreement, filing it away in the bottom drawer, and forgetting about it for several years is risky. While the document may still be “binding”, it can become weaker over the course of time as circumstances change, and therefore more susceptible to challenge through the Family Court.  


The Court has the power to set aside a Contracting Out Agreement if the terms amount to “serious injustice”. While that is a high threshold, there have been plenty of cases where it has been met by virtue of significant changes in a couple’s circumstances that make the terms of the Agreement really unfair. Those changes can be financial or non-financial, such as:


  • Someone losing their job and becoming financially dependant on the other;
  • Health issues;
  • The birth or adoption of children of the relationship;
  • A significant inheritance being received and changing the financial footing between the parties.


The point of reviewing a Contracting Out Agreement is to 3-fold:

  1. To ensure you are still comfortable with the terms, and understand what it provides;
  2. To ensure it is still broadly “fair” and fit-for purpose; and
  3. To reduce the chances that it could be successfully challenged through the Court at a later date.


Best practice when reviewing a Contracting Out Agreement is for both partners to take legal advice, exchange updated disclosure of their property interests, and for there to be some discussion about how the terms of the existing Agreement apply now. Depending on the circumstances, it might be wise to execute a short addendum Agreement to record the review, or to record any variations sought to the Agreement.


If you have a Contracting Out Agreement and want to discuss whether now is the time for it to be reviewed, please contact us…


For More Information

Speak to one of JB Morrison’s family law experts about occupational rent in NZ or the separation property division process,

 Our Rotorua family law experts:


See more of our family law articles here.


Prenuptial and Contracting Out Agreements