The applicable law (statute and case law)
The law on Ontario prenuptial agreements comes from the Family Law Act (R.S.O. 1990, c. F.3). In this Act, Ontario lawmakers discuss the rules and regulations of marriage contracts, which include prenups, postnups, separation agreements, and cohabitation agreements. Here’s what the Family Law Act covers:
- What you can include in a marriage contract
- How to form a valid document
- Provisions that are not allowed
- What a judge may set aside a marriage contract for
- How to rescind a marriage contract
- How to handle foreign marriage contracts (contracts created outside of Ontario)
The Family Law Act is also supplemented by case law (court opinions) that help shape the meaning and details of marriage contract law. For example, when independent legal advice is specifically required (or not) (Anderson v. Anderson, 2023 SCC 13).
Ontario’s laws on marriage contract creation
In Section 55 of the Family Law Act, Ontario law lays out what the formalities are for creating a valid marriage contract. The law specifically says, “A domestic contract and an agreement to amend or rescind a domestic contract are unenforceable unless made in writing, signed by the parties and witnessed.” (R.S.O. 1990, c. F.3, s. 55 (1)). In plain English, that just means the prenup must be:
- In writing
- Signed by both parties
- Witnessed by one person
Without these three things, you don’t have a valid and enforceable marriage contract.
Ontario’s laws on the contents of a prenup
In Section 52 of the Family Law Act, it addresses what you may include in your prenuptial agreement (a.k.a., marriage contract). Here’s what it says:
“Two persons who are married to each other or intend to marry may enter into an agreement in which they agree on their respective rights and obligations under the marriage or on separation, on the annulment or dissolution of the marriage or on death, including,
- (a) ownership in or division of property;
- (b) support obligations;
- (c) the right to direct the education and moral training of their children, but not the right to decision-making responsibility or parenting time with respect to their children; and
- (d) any other matter in the settlement of their affairs.”
- R.S.O. 1990, c. F.3, s. 52 (1); 2005, c. 5, s. 27 (25); 2020, c. 25, Sched. 1, s. 28 (6).
In addition, Section 56 addresses what you may NOT include in your Ontario prenup: contracts related to child support and custody and clauses related to chastity.
So, as you can see, stick to financial matters related to the marriage and potential divorce. And if you do talk about your children, make sure you only address matters related to their upbringing and education.
Ontario laws on when a judge can set aside a prenup
It’s not just about putting your prenup in writing and signing it. There’s more. You also need to follow some other rules that are less about formalities and more about the circumstances of the agreement. In Section 56 of the Family Law Act, you will find a section titled “Setting aside domestic contract,” which outlines the various reasons a judge may throw out a prenup in Ontario. Here’s what it says: “A court may, on application, set aside a domestic contract or a provision in it,
- (a) if a party failed to disclose to the other significant assets, or significant debts or other liabilities, existing when the domestic contract was made;
- (b) if a party did not understand the nature or consequences of the domestic contract; or
- (c) otherwise in accordance with the law of contract.”
- R.S.O. 1990, c. F.3, s. 56 (4).
In other words, both parties must share their accurate net worth and value of assets, debts, and income with their partner. They must understand the impact of what they are signing. And follow other principles of contract law (things like absence of fraud and duress and inequities).
Ontario laws on rescinding a contract
Section 55 of the Family Law Act explains that rescinding a contract requires the same formalities that the original contract required. This means the rescinding contract must be in writing, signed, and witnessed in order to be considered valid and enforceable. The same rules also apply regarding enforceability–the parties must share accurate and complete financial disclosure, understand the nature of the agreement, and the agreement must be free of fraud, duress, and significant inequities.
Ontario law on foreign marriage contracts
What does Ontario law say about marriage contracts created outside of the province? Such as in a different province of Canada or a different country altogether? Section 58 addresses this issue head-on. It specifically says: “The manner and formalities of making a domestic contract and its essential validity and effect are governed by the proper law of the contract, except that,
- (a) a contract of which the proper law is that of a jurisdiction other than Ontario is also valid and enforceable in Ontario if entered into in accordance with Ontario’s internal law;
- (b) subsection 33 (4) (setting aside provision for support or waiver) and section 56 apply in Ontario to contracts for which the proper law is that of a jurisdiction other than Ontario; and
- (c) a provision in a marriage contract or cohabitation agreement respecting the right to decision-making responsibility or parenting time with respect to children is not enforceable in Ontario.”
- R.S.O. 1990, c. F.3, s. 58; 2020, c. 25, Sched. 1, s. 28 (10).
There are two ways to interpret Section 58. The first way suggests that any domestic contract, regardless of where it was formed, must comply with Ontario law to be valid in the province. It’s a strict approach that prioritizes Ontario’s internal laws above all else. This interpretation could potentially invalidate contracts that are perfectly legal where they were created simply because they don’t meet Ontario’s specific requirements.
The second way offers a bit of breathing room. It suggests that Ontario law only comes into play if the contract is already invalid according to the laws of the jurisdiction where it was formed. Essentially, it’s a fallback option when the original governing law fails. This provides more certainty and respect for contracts created elsewhere. It acknowledges that couples may have valid reasons for choosing a specific jurisdiction to create their agreement, and it avoids Ontario imposing its rules unnecessarily.
More Ontario prenup laws based on notable case law
Ontario courts have seen a number of significant cases that have shaped how prenuptial agreements and other marriage contracts are interpreted and enforced. Here are some key takeaways from important court decisions:
- A Two-Stage Test for Fairness:
In Miglin v. Miglin, 2003 1 SCR 303, the Supreme Court of Canada established a crucial two-stage test for evaluating the validity of domestic contracts like prenuptial agreements. This test examines:
- Step 1: Circumstances at Formation: Were there any red flags at the time the agreement was signed, such as duress, undue influence, or lack of independent legal advice?
- Step 2: Circumstances at Enforcement: Have circumstances changed so dramatically since the agreement was signed that enforcing it would be unfair?
- Full Disclosure is Key:
The Ontario Court of Appeals emphasized the critical importance of complete financial disclosure in LeVan v. LeVan, 2008 ONCA 388. Without a clear and honest exchange of financial information, a court has the power to set aside a prenuptial agreement.
- Unfairness Can Void an Agreement:
McCain v. McCain, 2012 ONSC 7344 reinforced the principle that if an agreement is unfair, improvident, or unconscionable at the time it was created, it can be set aside. This highlights the need for agreements to be fundamentally fair and reasonable from the outset.
- “Kitchen Table” Agreements and Contractual Freedom:
More recently, the Supreme Court of Canada weighed in on “kitchen table” agreements (informal agreements made without lawyers) in Anderson v. Anderson, 2023 SCC 13. The court acknowledged that these agreements might lack formal legal advice or detailed formal financial disclosure (note: the financial disclosure provided was complete and accurate). However, as long as the agreement is fair and complies with Ontario law, it won’t automatically be set aside. This decision underscores the principle of contractual freedom between spouses.
- Traditional Contract Principles Still Apply:
While marriage agreements have their own specific legal considerations, general contract law principles remain relevant. Ward v. Ward, 2011 ONCA 178 provided a helpful list of these principles, including:
- Unconscionability: Is the agreement so one-sided that it shocks the conscience of the court?
- Undue Influence: Did one party exert excessive pressure on the other to sign?
- Duress: Was there coercion or threats involved?
- Uncertainty: Are the terms of the agreement vague or unclear?
- Mistake: Did a misunderstanding about a key fact influence the agreement?
- Misrepresentation: Did one party mislead the other?
- Fraud: Was there intentional deception?
- Repudiation: Did one party refuse to honor the agreement?
Does my Ontario prenup need to be notarized?
Nope! It’s not a requirement under Part IV of the Family Law Act, which addresses marriage contracts. The only formalities required are to put the contract in writing, have it signed by both parties and make sure there is a witness to the signing. However, there’s nothing stopping you from getting your Ontario prenup notarized if it would bring you some peace of mind. There are some benefits to doing so, including potentially eliminating some questions of fraud, should that ever be brought up down the road.
Final thoughts
Well, there you have it, folks! All of the Ontario laws on prenuptial agreements you could ever want and need. You’re practically a lawyer now! Kidding. Ontario prenup law is pretty simple. Follow the formalities for creating a contract, make sure it’s witnessed, provide full financial disclosure, don’t include any unenforceable terms, and make sure there isn’t any fraud or duress in the creation of the document, and you should be good to go! Cheers to your Ontario prenup journey!
Anna-Marie Musson is a Family Lawyer with over 20 years’ experience. A graduate of Windsor Law, Anna-Marie began practising in 2003. She was a partner at a prominent national Bay Street law firm before starting her own firm. Anna-Marie helps professionals and high net worth clients navigate the financial, emotional, and legal issues in divorce and separation. She also helps clients preserve their net worth and avoid financial ruin with Marriage Contracts (Pre-nups) and Cohabitation Agreements. Anna-Marie is the host of the Modern Divorce Show on 105.9 The Region and also hosts the upcoming Podcast – Love & Wealth.
0 Comments