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Supreme Court ruling clarifies status of pre-nup agreements

A ruling by the Supreme Court in a divorce case means that pre-nuptial agreements will generally be considered binding as long as they are fair and entered into freely.

The case involved German heiress Katrin Radmacher and her former husband Nicolas Granatino who is French. The couple married and lived in England so English law applies.

When they married they drew up a pre-nup agreement saying that he would not make a claim on her money if they ended up divorcing.

However, when they later divorced, Mr Granatino said he would suffer personal hardship if the agreement was upheld.

The High Court decided that it would be unfair to hold Mr Granatino to the pre-nup agreement and awarded him £5.8m from Miss Radmacher’s fortune.

However, that ruling was then overturned by the Court of Appeal which cut the payment to £1m - a figure Miss Radmacher was prepared to accept. Mr Granatino’s lawyers argued that the Court of Appeal had created a revolutionary piece of legislation instead of applying existing case law.

They took the case to the Supreme Court but that too ruled in favour of Ms Radmacher.

Lord Phillips, president of the Supreme Court, said: "The court should give effect to such an agreement if it is freely entered into by each party with a full appreciation of its implications, unless in the circumstances prevailing, it would not be fair to hold the parties to their agreement."

He stressed that judges would still have the discretion ignore pre-nups if they were unfair, especially to children, but said that following the ruling it will be natural to infer that parties entering into agreements will "intend that effect be given to them".

"What is important is that each party should have all the information that is material to his or her decision, and that each party should intend that the agreement should govern the financial consequences of the marriage coming to an end."

Lord Phillips added: "The circumstances of the parties at the time of the agreement will be relevant. Those will include such matters as their age and maturity, whether either or both had been married or been in long-term relationships before. What may not be easily foreseeable for less mature couples may well be in contemplation of more mature couples."

It means that if both parties freely enter into a pre-nup that is fair, and both disclose all the relevant financial information in advance, then that agreement will be upheld by the courts.

Please contact us if you would like more information about pre-nuptial agreements or any aspect of matrimonial and family law.

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