The topics in the Dial-A-Law series provide only general information on legal issues within the province of Alberta. This service is provided by Calgary Legal Guidance funded in part by the Alberta Law Foundation. The purpose is to make you aware of your legal rights and responsibilities. This is not legal advice. If you require legal advice, you should contact a lawyer.
This topic discusses things that you should consider when negotiating a contract for your relationship. The best time to negotiate the terms of the contract is when you and your partner can still agree on certain things such as financial planning and the distribution of property.
There are many advantages to making a contract for your relationship. You get a chance to find out your partner’s views on financial responsibility. You may find out career plans. You know how your property will be divided if you separate. There may be a family business or family assets that the family wants to control and maintain separate and apart from your partner.
The type of the contract will depend upon what type of relationship you are in:
- If you are already married, then you write a ‘marriage contract’.
- If you are going to married, then you write a ‘pre-nuptial contract.’
- If you are living in a common-law relationship, then you write a ‘cohabitation contract’.
For your contract to be enforceable, each of you must have independent legal advice. Both of your lawyers will be required to sign a separate certificate stating that independent legal advice has been given. Legally binding contracts require offer, acceptance and consideration. Consideration is usually something of value that passes between you and the other party. For example, consideration may be the changing of title on your home or your car from your sole name to both your names.
Be very careful what you put into your contract. The Court will not enforce a contract if it offends public policy or contains terms that are simply not enforceable. For example, if you have a term that asks for personal services such as laundry duties that term would not be enforceable by the Courts. If you have a term that says there will be no children of the relationship or that the marriage will end after a certain number of years, that term is also not enforceable.
Think carefully about the terms you want included in the contract. Only include terms you are prepared to take responsibility for after the contract is signed.
Think carefully before you enter into joint debt and address it in the contract. For example, if you cosign a loan for your spouse at the bank for a car loan and your spouse does not make the regular payments, or you separate and they fail to make the payments the bank will come after you even if you do not have the car. You must pay the bank because you cosigned the loan. If you have a contract that says your spouse takes full responsibility for that particular debt, you could then sue your spouse for breach of the contract. However, this is still no guarantee of recovery by you.
You and your spouse must agree on every term of the contract. The terms may address the following issues of your relationship:
- How your Property will be distributed between you if you separate. If you married, be sure that you understand your rights under the Matrimonial Property Act in the event of separation. You may contract out of your rights in the Act and choose your own rules on how you will share your property and possessions. However, the ‘contracting out’ of the Act must be freely and voluntarily agreed to by both parties, and both you and your spouse must have separate legal counsel to explain the rights that each of you or one of you may be giving up. You must also acknowledge in writing that you understand that you may be losing your rights under the Matrimonial Property Act.
- You may want to plan how you each use and share your incomes to cover expenses and contribute to savings. You may also include special arrangements for times when one of you is not working or you quit your job in order to raise children or return to school. You may also want to arrange for separate and joint debts, bank accounts, and investments.
- You may want to arrange for financial support for yourself or the children in the event of relationship or marital breakdown. If the terms for support payments are not fair, then the Court may overrule your contract. No Court Order will be issued with respect to a divorce until support arrangements for the children are made in their best interests and the amount of child support is in accordance with the Federal Child Support Guidelines. If this is not your first marriage or common-law relationship, there may be adult children to consider and the division of your estate as well.
Terms should also be included that allow you and your partner to change the contract according to changing circumstances. A term should be added that states the contract may be reviewed on request by one of you. For example, if you both decide to have children but have no term in the contract addressing the care of the children, the agreement likely needs to be amended. All major changes to the contract must be in writing. Both of you must sign the amended contract and have it witnessed by 2 people and get independent legal advice again. You should have a lawyer review the original contract and the new contract to ensure that the changes you make are appropriate and your rights are protected.
It is sometimes important to include a term that automatically ends the contract when a certain event occurs. For example, the contract may end on the day that you have a child; the youngest child reaches the age of 18, or on the day of a divorce.
Any type of personal contract may be binding on you for all time. It is vital to see a lawyer and get independent legal advice before you sign any type of contract.