Contracting out agreements (prenups) can protect assets, but not all are enforceable. Learn when these agreements may be declared void or set aside under New Zealand law.
When Can a Contracting Out Agreement Be Void or Set Aside?
In New Zealand, contracting out agreements (commonly called prenups) allow couples to decide in advance how property will be divided if their relationship ends. These agreements operate as exceptions to the Property (Relationships) Act 1976 (PRA), which generally requires equal sharing of relationship property in marriages, civil unions, or de facto relationships lasting more than three years.
While contracting out agreements provide certainty and asset protection, they must meet strict legal requirements. Otherwise, they may be declared void, unenforceable, or later set aside by the Court.
Legal Requirements for Enforceability
To be valid, a contracting out agreement must:
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Be in writing and signed by both parties.
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Be signed only after each party has received independent legal advice.
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Be witnessed by a lawyer.
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Include certification by the witnessing lawyer that the agreement’s effects were explained to their client.
Failure to meet these requirements usually renders the agreement void. However, in limited circumstances, the Court may still enforce a non-compliant agreement—provided the deficiency has not caused material prejudice to either party.
Grounds for Setting Aside a Contracting Out Agreement
Even when all legal formalities are followed, the Court can set aside an agreement if it would result in serious injustice. Factors considered include:
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Whether the agreement was fair or reasonable at the time it was signed.
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Whether it has become unfair due to changed circumstances (e.g., children, career sacrifices, financial dependence).
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How much time has passed since the agreement was made.
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The extent to which one party relied on the agreement.
For example, if an agreement excluded one partner from rights to the family home, but over time that partner became the primary caregiver for children and homemaker for more than ten years, the Court could decide that enforcing the agreement would be unjust.
Other reasons agreements may be set aside include:
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Duress or undue influence – one party was pressured or coerced.
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Unconscionable conduct – significant imbalance of bargaining power.
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Lack of understanding – inadequate or absent legal advice.
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Failure to anticipate future events – agreements that ignore foreseeable life changes, such as children, illness, or financial sacrifices.
Best Practices to Avoid Challenges
To reduce the risk of a contracting out agreement being overturned:
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Ensure both parties receive independent legal advice.
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Avoid urgency or pressure when signing.
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Include review clauses for major life events.
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Strive for fairness and transparency—one-sided agreements are more vulnerable to challenge.
Why Legal Advice is Essential
Contracting out agreements are powerful tools for protecting assets, but only when properly drafted and executed. At Core Legal Masterton & Wellington, we help clients prepare robust, enforceable agreements that safeguard their interests while minimising the risk of future disputes.
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Frequently Asked Questions (FAQs)
What makes a contracting out agreement invalid?
If the agreement is not in writing, not independently advised on, or not properly witnessed by a lawyer, it will generally be void.
Can the Court enforce a non-compliant prenup?
Yes, but only if the non-compliance did not materially disadvantage either party.
What is “serious injustice”?
A prenup may be set aside if enforcing it would cause significant unfairness, especially after major life changes.
Do contracting out agreements need to be updated?
Yes. It is best practice to include review clauses and update agreements when significant events occur, such as marriage, children, or major property purchases.
Why do I need a lawyer for a prenup?
Independent legal advice is not just recommended—it is a legal requirement under the PRA. Without it, the agreement cannot be enforced.
Need a bit of legal assistance? Contact a Corelegal team member today and learn more about our legal services. You won’t regret it.
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