Canceling a financial agreement, the marital property agreement between spouses under Israeli law, means canceling the arrangement that sets out each spouse’s financial obligations and responsibilities during the marriage and after divorce: the division of assets, spousal support, child support and other financial matters connected to the marriage. A financial agreement is a binding legal document, and yet canceling one is possible.
In this article we ask whether a financial agreement can be canceled, review the grounds for cancellation, and explain why legal representation matters in the process.
Canceling a financial agreement – how is it done?
Canceling a financial agreement between spouses can be a difficult and involved process.
Sometimes the agreement is canceled by mutual consent. For that, both parties must agree in writing, and any changes made to the agreement must be signed by both. Before canceling, both parties should understand their rights and obligations under the arrangement and weigh the consequences of ending it.
When the couple cannot agree on cancellation, a claim must be filed with the court that approved the financial agreement.
When a couple signs a prenuptial financial agreement, they must have it approved before a competent authority. Once approved, the agreement carries the force of a judgment, and to cancel it, at least one of the grounds for cancellation under contract law must be proven.
Canceling a financial agreement – what are the grounds?
Financial agreements are sometimes canceled following a breach of contract or other disputes between the parties. Cancellation must follow the contractual terms and conditions, which in most cases means meeting certain legal requirements, such as giving written notice and allowing the other party a reasonable time to respond.
Beyond that, cancellation requires one or more of the following grounds: fraud, misrepresentation, mistake, force majeure, breach of warranty or of the terms set out in the contract, failure to perform a contractual obligation, or insolvency or bankruptcy proceedings involving one of the parties.
Fraud and misrepresentation, among the most common grounds for cancellation
Fraud and misrepresentation describe a situation in which one spouse concealed material information from the other about the extent of his or her property, or acted in bad faith when the financial agreement was signed.
To ask the court to cancel the agreement on this ground, the spouse seeking cancellation must prove that the other spouse deliberately concealed the information, and that had the applicant known about that conduct at the time of signing, he or she would not have signed the financial agreement.
Cancellation due to a defect in the approval process
For a financial agreement to carry the force of a judgment, it must pass through several stages designed to ensure that both parties fully understand and accept its terms. One possible defect is proof that the court did not properly verify that the spouses understood the meaning of the agreement they signed.
Cancellation based on the parties’ conduct
Even when a couple signed a financial agreement of their own free will, they may end up acting contrary to what they signed.
A settled rule of contract law is that the parties’ conduct can show that an agreement has lapsed and been abandoned. When one spouse does not act in accordance with the provisions of the financial agreement, that conduct may itself be a valid ground for cancellation.
Cancellation on the ground of mistake
Cancellation for mistake is a serious legal question that has to be handled carefully to protect both parties. Financial agreements are binding documents, and a mistake by either party can carry heavy consequences. In such cases, one or both parties may be entitled to demand cancellation on account of the mistake.
The court will accept a mistake plea when a party proves that he signed the financial agreement because of a mistake, and that but for that mistake he would not have signed. It is worth knowing that where the mistake can be corrected, the court will order it corrected rather than rush to cancel the financial agreement.
When an agreement is canceled, take the steps needed to make sure every obligation and liability between the spouses, including the financial ones, is addressed, that both parties understand what the cancellation means, that a formal document describing the cancellation is drawn up, and that all relevant parties are notified.
Canceling a financial agreement – why legal representation matters
Because a financial agreement carries the force of a judgment, courts do not readily accept claims to cancel one.
A professional lawyer will make sure the grounds for cancellation actually exist and are realistic, and will see that they are proven in court.
A lawyer’s experience and knowledge in family law generally, and in financial agreements in particular, help ensure that everyone involved in the cancellation understands their rights and obligations, and that every issue the financial agreement covers is properly resolved.
So, can a financial agreement be canceled or not? It can
Although a financial agreement is approved and signed before the court and carries the force of a judgment, several legal grounds allow it to be canceled.
To do so, a claim to cancel the financial agreement must be filed before the judicial authority that approved it, proving one of the legal grounds for cancellation: misrepresentation, fraud, the spouses’ conduct, mistake, or another recognized ground.
