Binding Financial Agreement vs Consent Orders | Which One Protects You Best?

A Binding Financial Agreement is one of the main legal tools available to couples in Australia who wish to manage their financial affairs during or after a relationship. Alongside Consent Orders, it allows couples to make clear arrangements about property, liabilities, and spousal maintenance without needing to go through lengthy court proceedings. 

These agreements can be made at different stages, before moving in together, during a relationship, or after separation. While both options are legally recognised, they operate in different ways. Each has its advantages depending on the couple’s needs, financial complexity, and stage of the relationship. 

Making the right choice starts with knowing how each option works, what protections they offer, and what risks they carry. From the structure of a Binding Financial Agreement to the enforceability of Consent Orders, the sections that follow break down everything you need to know to make an informed, confident decision. 

What Is a Binding Financial Agreement (BFA)? 

A Binding Financial Agreement (BFA) is a written contract between two parties that outlines how property, liabilities, and spousal maintenance will be handled if the relationship ends. It is recognised under the Family Law Act 1975 and can be used by both married and de facto couples. Unlike informal arrangements, a BFA carries legal weight when properly drafted and executed. 

Couples can enter into a BFA at any stage of their relationship, before it begins, during the course of the relationship, or after it has ended. This flexibility makes it a useful tool for planning ahead or resolving financial matters after separation without the need for court intervention. 

A BFA can set out how assets will be divided, how debts will be managed, and whether one party will provide spousal maintenance to the other. These agreements are especially helpful for protecting assets acquired before the relationship, preserving inheritance or business interests, and ensuring financial support arrangements are clear. Parents with children from previous relationships often use BFAs to protect the financial future of those children. 

However, a BFA cannot cover parenting arrangements. These must be dealt with separately, typically through Consent Orders. To be legally binding, each party must obtain independent legal advice before signing. This requirement ensures both individuals fully understand the terms, their rights, and the long-term consequences. Once in place, the agreement forms a legal framework that can guide financial matters if the relationship ends.  

What Does a BFA Include and How Does It Work? 

A Binding Financial Agreement sets out clear terms for how a couple’s financial affairs will be managed during or after their relationship. It is designed to minimise uncertainty and prevent disputes by outlining exactly how assets and obligations will be treated. The document must be carefully structured to ensure it reflects the true intentions of both parties and stands up to legal scrutiny. 

Key elements of a BFA  

Once both parties have received independent legal advice and signed the agreement, the BFA becomes legally enforceable. This advice must be obtained before signing to ensure each party understands their rights and obligations, as well as the potential consequences of the agreement. 

Without legal advice, the BFA will not be valid. This safeguard exists to prevent situations where one party enters into an agreement without full awareness of what they are agreeing to. It also helps prevent later challenges based on claims of unfairness or misunderstanding. 

A well-prepared BFA provides stability and certainty in the event of separation. However, like any legal agreement, it is not immune from challenge.  

Can a BFA Be Challenged or Set Aside? 

A Binding Financial Agreement is designed to be legally enforceable, but under certain conditions, a court may set it aside. Unlike Consent Orders, a BFA is not automatically reviewed by the court for fairness when it is created. The court will only become involved if one party initiates legal proceedings to challenge or enforce the agreement. 

There are limited but significant grounds on which a court may declare a BFA invalid. These usually involve issues that undermine the integrity of the agreement or render it unjust in light of changed circumstances.  

Common reasons 

• Misrepresentation or fraud – One party deliberately concealed or misrepresented their financial position. 
• Major life changes affecting fairness – Events such as the birth of a child may alter the fairness of an agreement, particularly if these circumstances were not anticipated. 
• Failure to meet legal advice requirement – If either party did not receive proper independent legal advice before signing, the agreement may be invalidated. 
• Breach of contract by one party – If one party does not comply with the terms of the BFA, the other may seek court orders to enforce the agreement or resolve the breach. 

In some cases, a party may ask the court to set aside the BFA altogether if the original conditions have become unreasonable or if enforcing the agreement would cause undue hardship. However, courts are generally reluctant to interfere unless there is clear justification. 

When disagreements arise or obligations are not met, the court may step in to enforce the BFA or issue new financial orders. For those seeking a court-approved resolution from the outset, Consent Orders offer an alternative pathway.  

What Are Consent Orders and How Do They Work? 

Consent Orders are written agreements between parties that are approved and formalised by the Family Court. Unlike Binding Financial Agreements, Consent Orders receive judicial oversight to ensure they are just and equitable. These orders can address a wide range of matters, including the division of property, spousal maintenance, and parenting arrangements after separation. 

Consent Orders are especially useful when both parties have reached an agreement but want the certainty and enforceability that comes with a court order. Once approved, the terms carry the same legal effect as if the matter had been decided by a judge. This makes them a preferred choice for many separating couples who seek a binding resolution without going to trial. 

The court requires full transparency during the application process. Parties must disclose all relevant financial information and, where applicable, provide details of proposed parenting arrangements. If children are involved, any history of family violence or abuse must also be disclosed so the court can assess whether the proposed arrangements are in the best interests of the children. 

Steps to Apply for Consent Orders 

1. Reach agreement with former partner on how to divide property, handle spousal maintenance, and, if applicable, arrange parenting responsibilities. 
2. Prepare the application including a financial statement and, where necessary, a parenting plan. 
3. Submit the documents to the Family Court for review. 
4. Respond to any court queries if clarification or additional information is requested. 
5. Receive sealed Consent Orders once the court is satisfied that the agreement is fair, safe, and lawful. 
6. If approved, Consent Orders provide lasting clarity and security. However, timing is critical, as there are strict deadlines for submitting an application.  

Key Time Limits and Legal Risks 

Consent Orders offer a structured way to resolve financial and parenting matters, but they must be lodged within specific timeframes. These legal deadlines are strictly enforced, and failing to meet them can significantly affect a party’s rights. It is important for separated couples to act promptly if they wish to finalise agreements through the court. 

Time limits depending on the type of relationship 

If these deadlines are missed, the affected party must seek the court’s permission to proceed out of time. This process is known as applying for “leave to proceed out of time” and involves demonstrating why the delay occurred and why the claim remains valid. There is no guarantee the court will grant the application, even if the original claim had merit. 

Missing the deadline can result in the complete loss of entitlement to property settlement or spousal maintenance. In some cases, a delay may also lead to increased legal costs and unnecessary stress. It is far more efficient and effective to finalise Consent Orders within the prescribed timeframe. 

Understanding these deadlines can help parties avoid common procedural pitfalls. For those who are still deciding between Consent Orders and a Binding Financial Agreement, a direct comparison of the two may assist in making an informed decision. 

Choosing Between a BFA and Consent Orders 

Deciding between a Binding Financial Agreement and Consent Orders depends on your stage of life, relationship history, and the nature of the agreement you wish to formalise. There is no single solution that suits every couple. Each option offers distinct benefits, and the right choice will depend on your personal goals and legal priorities. 

A BFA may be more appropriate if you are entering or continuing a relationship and want to set clear expectations about property and financial matters. It allows couples to decide in advance how their affairs will be handled, offering protection for pre-existing assets or wealth intended for children from a previous relationship. Since BFAs do not require court involvement, they can offer greater privacy and flexibility. 

Consent Orders are usually more suitable once a couple has separated. They allow both parties to formalise an agreement and submit it for court approval, which ensures that the terms are fair and enforceable. This option is also necessary when parenting arrangements need to be included, as BFAs do not cover custody or child-related issues. 

Both documents carry legal force, but they involve different procedures, costs, and degrees of oversight. Before proceeding with either, it is critical that each party receives independent legal advice. This ensures that the agreement is properly executed and reflects each person’s rights and obligations. 

Contact us if you would like legal guidance on which option best fits your situation.