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Good Reasons to Overturn a Written Promise - Part 2

contractCapture.PNGUnenforceable Postnuptial Agreements

Certain contracts govern how assets are distributed in a divorce. Many believe that prenuptial (made before the parties marry) and postnuptial (made after the parties marry) agreements are ironclad and will dictate proceedings after a marriage dissolves. However, they are, like any contract, unenforceable under certain circumstances. Reconciliation agreements, as they are called, are suspect and possibly unenforceable when any of the following elements are present:

  1. whether the marital rift was substantial when the promise to reconcile was made;

  2. whether the agreement complied with the statute of frauds;

  3. whether the circumstances under which the agreement was entered into were fair to the party charged;

  4. whether the agreement's terms were unconscionable when it was made;

  5. whether the party seeking enforcement acted in good faith; and

  6. whether the changed circumstances rendered literal enforcement inequitable

In the recent New Jersey Appellate Court case of Kriss v. Kriss, a court looked at whether a postnuptial agreement was unenforceable, in light of the above factors. The court specifically investigated unconscionability, possible violations of good faith, and the presence of changed circumstances and duress.

The case involves a husband who started a lucrative construction company and a wife who was employed at that business doing bookkeeping. In 1998, the husband filed an initial complaint for divorce, closed their joint bank accounts, and took other actions so the spouses were financially separated. In 2003, the husband again filed for divorce. The wife begged the husband to drop the case. He, in turn, presented her with a postnuptial agreement that included the wife giving up any interest in the company and all rights to alimony in the event of a divorce. He would continue to pay for all housing expenses.

He told the wife that he would withdraw his complaint if she signed the agreement. Immediately after the wife signed the agreement - against the advice of her attorney - the husband ordered his wife to pay half of the mortgage on their house along with other costs. The wife did.

The court rendered the agreement unenforceable for the following reasons:

  • Duress - The wife was under duress when she signed the agreement. She testified that she would have signed anything to save the marriage, and the court noted the husband intimidated his wife into signing it.

  • Undisclosed Financial Information - It also found that the husband did not fully disclose his financial circumstances at the time they entered the agreement, as required by law.

  • Improper Waiver of Alimony - The husband did not provide sufficient information about the value of his company at the time of the agreement, making a decision about permanently waiving rights to alimony improper. The court found the waiver of alimony at the time to be unconscionable.

  • Violation of Good Faith - Furthermore, the husband's requirement that the wife pay for half the costs of the home after she entered into the agreement, even though he promised he would pay for all such costs, was an act in bad faith.

  • Changed Circumstances - The court finally noted that even if the agreement had been fair at the time a number of changed circumstances rendered it unfair if enforced. For example, the value of the husband's company had increased significantly.

Taken together, the reconciliation agreement between the parties was unconscionable for a number of reasons. The court ultimately awarded alimony to the wife, finding that the husband had the "clear financial ability to pay" alimony, and ordered the equitable distribution of the husband's interest in the business and money market accounts to the wife, in spite of the reconciliation agreement.

Angela Yu is a New Jersey and New York attorney with a multifaceted practice area focusing in corporate, real estate and general contract law. She uses her interest in real life application of the law to author articles and other scholarship on a broad range of cutting-edge legal and business topics. Ms. Yu is a published legal author and holds a J.D. and M.B.A. from Rutgers School of Law and Rutgers Business School. Neither she nor Mike Farhi provides legal advice on this website. This blog post and any blog posts do not constitute legal advice.

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