What is a domestic contract?

May 3, 2024

Marie-Hélène Haché

Blog

What is a domestic contract?

A domestic contract is an agreement entered into by spouses to arrange certain aspects of their affairs, such as child support, child parenting arrangements (custody), spousal support or division of family property. Such an agreement can be made at the beginning of the relationship, during the course of it, or at the time of separation.

You may have heard domestic contracts referred to as a “pre-nup”, cohabitation agreement, separation agreement, divorce contract or custody agreement, amicable agreement. These terms are not necessarily valid in the eyes of the law, but they do refer to a domestic contract.

Why execute a domestic contract?

Having a domestic contract is advantageous because it allows couples to choose how to divide their assets and determine their rights and obligations in advance, in the event of separation. It also avoids the need to go to court to settle these issues.

Domestic contracts in courts

Domestic contracts can be an important element in a marital relationship, due to the unique situations in which they are negotiated and entered into. In order to avoid disputes in courts, and to ensure the validity of the contract, the involvement of lawyers is a safeguard to ensure that the parties understand the terms and effect of their agreement, as well as the rights they have and waive under the applicable legislative regime.

Criteria for the validity of a domestic contract

In New Brunswick, domestic contracts are enforced under section 3 of the Matrimonial Property Act.

To be valid, a domestic contract must be : 

  • in writing, 
  • signed by the parties to the contract,
  • must be witnessed,
  • have obtained independent legal advice from the other party,
  • and have been made after January 1, 1981. 

The Court will disregard certain provisions of the domestic contract if the application of those provisions would be unfair in all the circumstances. This includes : 

  • if the domestic contract was made before January 1, 1981, and was not made in contemplation of the commencement of section 3 of the Matrimonial Property Act, RSNB 2012, c 107;  
  • if the parties to the contract have not received independent legal advice from each other. 

In essence, judges must examine domestic contracts with particular sensitivity in the context of family law. To determine the genuineness of the domestic contract, judges will consider the circumstances surrounding the conclusion of the contract and the content of the contract, where permitted by the applicable law.

What are the different types of domestic contract?

There are three different types of domestic contract: 

  1. marriage contracts, 
  2. cohabitation agreements,
  3. separation agreements. 

A marriage contract is an agreement between two married persons made before or during their marriage. In this contract, the spouses define their rights and obligations during their marriage and in the event of divorce or separation. 

A cohabitation agreement or domestic contract under the Matrimonial Property Act, RSNB 2012. c 107, is an agreement between a couple (not married) made during their period of cohabitation in the event of death or separation. A cohabitation agreement can automatically become a marriage contract if the couple marries following the creation of the cohabitation agreement.

A separation agreement is a contract made at the time of separation or divorce that allows a couple to determine their rights and obligations regarding property ownership or division, support obligations, children including parenting time and decision-making responsibilities, and any other applicable issues.

What rights and obligations can a domestic contract define in advance?

Marriage contracts and cohabitation agreements provide for the following rights and obligations: 

  • Ownership in or distribution of property,
  • support obligations,
  • or any other applicable issue.

In marriage contracts and cohabitation agreements, it is impossible to define in advance the parenting time or the right to decision-making responsibilities of their children. 

In separation agreements, the same elements above are provided for, except that it is possible to include preceding related to their children, such as:

  • the right to parenting time or decision-making responsibility with respect to their children.

Who can (or should) engage in a domestic contract?

  • Couples intending to marry; 
  • Married couples
  • Couples cohabiting without being married; 
  • Couples who have separated after being married or cohabiting; 
  • Parents of separated children;
  • Parents of children even if they have never cohabited.