The Uniform Premarital and Marital Agreements Act

Last month, in Part One of this article, we described the genesis of the uniform acts ' UPMAA and UPAA ' and compared them with New York law. Part Two herein discusses other differen- ces among the three statutes.

Independent Counsel

The UPMAA is more specific than either the UPAA or New York law regarding whether parties need independent counsel to make a binding agreement. The UPAA does not permit a party to challenge an agreement based on lack of independent counsel, although a drafters' note says the lack of counsel might be relevant to a claim that the agreement is unconscionable. New York similarly does not make lack of counsel a basis for a challenge to an agreement, although it may help show duress or overreaching by the other party.

The UPMAA, in contrast, specifically requires only that parties have access to independent legal counsel, although not that they actually receive it. To invalidate an agreement, the challenging party must show, by a preponderance of the evidence, that he or she either did not have reasonable time to find and consult with an independent lawyer before signing or did not have the means to pay such a lawyer (i.e., neither the resources to pay for a competent matrimonial lawyer nor an offer from the other party to do so). Under a literal reading of the UPMAA, a party who was represented by an independent lawyer but who did not have time to consult with that lawyer and consider his or her advice could challenge the resulting agreement because he or she would not have had “access” as defined by UPMAA ' 9(b). In any case, a party claiming lack of access to independent counsel must also show that the other party had representation. An agreement between two unrepresented parties cannot be challenged for lack of access to counsel, even if one party had the chance to secure independent counsel and the other did not.

Financial Disclosure and Unconscionability

The UPMAA also makes it slightly easier than the UPAA to overturn an agreement based on insufficient financial disclosure. The UPMAA requires a challenging party to prove that the other party's description of his/her assets, liabilities and income was not “reasonably accurate” or not made in good faith; that the challenging party had no adequate knowledge of the other party's assets, liabilities and income; and that the challenging party had no reasonable basis for such adequate knowledge. Furthermore, the UPMAA allows parties to waive financial disclosure with an express statement in a signed document separate from the agreement.

The UPAA required a party challenging a premarital agreement to make a similar showing (including the lack of waiver) and to show that the agreement was unconscionable at the time of signing. In other words, under the UPAA, neither lack of financial disclosure nor unconscionability at the time of signing alone sufficed to invalidate a premarital agreement; both were required.

The UPMAA makes unconscionability and insufficient financial disclosure separate ' albeit narrow ' grounds to invalidate an agreement. Under ' 9(f), a court may refuse to enforce an agreement in whole or in part if it was unconscionable when signed. The ULC published along with the UPMAA an optional provision whereby a court may refuse to enforce part or all of an agreement if it would result in substantial hardship due to a material change in circumstances after the signing of the agreement. Such a “second-look” provision allows courts to respond if the party challenging the agreement has suffered health problems or otherwise lost earning capacity, or if the party upholding the agreement has done better than could be anticipated.

New York courts will invalidate agreements based on unconscionability, after a holistic review. The leading case, Christian v. Christian' held that a separation agreement was unconscionable and therefore unenforceable if it were “such as no person in his or her senses and not under delusion would make on the one hand, and as no honest and fair person would accept on the other.” 42 N.Y.2d 63, 71, 365 N.E.2d 849, 855 (1977) (internal quotations and alterations omitted). Courts focus, therefore, on what could have been known when the agreement was made, not on the situation at the time of judgment. Their review is colored by whether they perceive overreaching in how the agreement was established, including the extent of financial disclosure and whether the party who seeks to invalidate the agreement had independent counsel. See, e.g., id. at 71-73, 365 N.E.2d at 855-56; Pennise v. Pennise , 120 Misc.2d 782, 784-85, 466 N.Y.S.2d 631, 633 (Sup. Ct. 1983).

To its case law, New York's statute adds a “second-look” provision, which applies only to spousal support. An agreement on spousal support will not be enforced if it was not fair and reasonable when made, or if it is unconscionable when judgment is entered. New York and both uniform acts (in slightly different terms) also invalidate spousal support provisions that leave the recipient eligible for public assistance.

Other Grounds for Challenge

Although the uniform acts and New York statutes enumerate various grounds for invalidating all or part of an agreement, they leave the door open to numerous others. No provision squarely addresses presenting a premarital agreement to the other party shortly before their planned wedding, when invitations have been sent and deposits paid. Many states treat such behavior as a form of duress and grounds not to enforce the agreement. The UPMAA does not define duress, although it does place the burden of persuasion on a party who claims that he or she signed an agreement under duress or otherwise involuntarily. New York case law uses the labels of duress and overreaching for agreements that seem unfair in their substantive terms, or in how they were negotiated, or in both regards.

Section 5 of the UPMAA explicitly states that legal and equitable principles apply to premarital and marital agreements unless the UPMAA displaces them. Oddly, the drafters' comment to ' 5 says that it allows parties to challenge an agreement on the ground of “unconscionability” as a matter of state common law. Perhaps there are two forms of “unconscionability” in UPMAA states, one derived from general contract law and one from UPMAA ' 9(f), which, as noted above, allows courts to refuse to enforce provisions that are “unconscionable at the time of signing.”

Choice of Law

Finally, both uniform acts include choice-of-law provisions. The UPMAA provision basically tracks the Restatement of Conflict of Laws and allows parties to select the law of any jurisdiction that has a significant relationship to the agreement or to either party, unless it is “contrary to a fundamental public policy” of the forum state. If and when the UPMAA becomes widespread, parties who are confident their agreement is valid and enforceable under the UPMAA will be able to exploit that provision to almost ensure that their agreement will be enforced. They will find a UPMAA jurisdiction with some connection to their agreement or either of them or, if need be, sign their agreement in a UPMAA state. They will select that UPMAA jurisdiction's law to govern the validity and enforceability of the agreement. Then, whatever state ultimately considers their agreement, if that state has adopted either the UPMAA or the Restatement of Conflict of Laws, it will apply the UPMAA and enforce the agreement unless a “fundamental public policy” is at stake.

The UPAA's choice of law provision is less thorough; it specifies that parties can choose the law that will govern the construction of their agreement, but it does not explicitly allow them to choose the law that will determine the validity or enforceability of the agreement.

The final part of this article, in an upcoming issue, will discuss the variations in the acts.

Matthew A. Feigin is an attorney at Katsky Korins LLP. The author would like to thank Marcy L. Wachtel for her review and Michael A. Mosberg for encouraging him to research the UPMAA.

Last month, in Part One of this article, we described the genesis of the uniform acts ' UPMAA and UPAA ' and compared them with New York law. Part Two herein discusses other differen- ces among the three statutes.

Independent Counsel

The UPMAA is more specific than either the UPAA or New York law regarding whether parties need independent counsel to make a binding agreement. The UPAA does not permit a party to challenge an agreement based on lack of independent counsel, although a drafters' note says the lack of counsel might be relevant to a claim that the agreement is unconscionable. New York similarly does not make lack of counsel a basis for a challenge to an agreement, although it may help show duress or overreaching by the other party.

The UPMAA, in contrast, specifically requires only that parties have access to independent legal counsel, although not that they actually receive it. To invalidate an agreement, the challenging party must show, by a preponderance of the evidence, that he or she either did not have reasonable time to find and consult with an independent lawyer before signing or did not have the means to pay such a lawyer (i.e., neither the resources to pay for a competent matrimonial lawyer nor an offer from the other party to do so). Under a literal reading of the UPMAA, a party who was represented by an independent lawyer but who did not have time to consult with that lawyer and consider his or her advice could challenge the resulting agreement because he or she would not have had “access” as defined by UPMAA ' 9(b). In any case, a party claiming lack of access to independent counsel must also show that the other party had representation. An agreement between two unrepresented parties cannot be challenged for lack of access to counsel, even if one party had the chance to secure independent counsel and the other did not.

Financial Disclosure and Unconscionability

The UPMAA also makes it slightly easier than the UPAA to overturn an agreement based on insufficient financial disclosure. The UPMAA requires a challenging party to prove that the other party's description of his/her assets, liabilities and income was not “reasonably accurate” or not made in good faith; that the challenging party had no adequate knowledge of the other party's assets, liabilities and income; and that the challenging party had no reasonable basis for such adequate knowledge. Furthermore, the UPMAA allows parties to waive financial disclosure with an express statement in a signed document separate from the agreement.

The UPAA required a party challenging a premarital agreement to make a similar showing (including the lack of waiver) and to show that the agreement was unconscionable at the time of signing. In other words, under the UPAA, neither lack of financial disclosure nor unconscionability at the time of signing alone sufficed to invalidate a premarital agreement; both were required.

The UPMAA makes unconscionability and insufficient financial disclosure separate ' albeit narrow ' grounds to invalidate an agreement. Under ' 9(f), a court may refuse to enforce an agreement in whole or in part if it was unconscionable when signed. The ULC published along with the UPMAA an optional provision whereby a court may refuse to enforce part or all of an agreement if it would result in substantial hardship due to a material change in circumstances after the signing of the agreement. Such a “second-look” provision allows courts to respond if the party challenging the agreement has suffered health problems or otherwise lost earning capacity, or if the party upholding the agreement has done better than could be anticipated.

New York courts will invalidate agreements based on unconscionability, after a holistic review. The leading case, Christian v. Christian' held that a separation agreement was unconscionable and therefore unenforceable if it were “such as no person in his or her senses and not under delusion would make on the one hand, and as no honest and fair person would accept on the other.” 42 N.Y.2d 63, 71, 365 N.E.2d 849, 855 (1977) (internal quotations and alterations omitted). Courts focus, therefore, on what could have been known when the agreement was made, not on the situation at the time of judgment. Their review is colored by whether they perceive overreaching in how the agreement was established, including the extent of financial disclosure and whether the party who seeks to invalidate the agreement had independent counsel. See, e.g., id. at 71-73, 365 N.E.2d at 855-56; Pennise v. Pennise , 120 Misc.2d 782, 784-85, 466 N.Y.S.2d 631, 633 (Sup. Ct. 1983).

To its case law, New York's statute adds a “second-look” provision, which applies only to spousal support. An agreement on spousal support will not be enforced if it was not fair and reasonable when made, or if it is unconscionable when judgment is entered. New York and both uniform acts (in slightly different terms) also invalidate spousal support provisions that leave the recipient eligible for public assistance.

Other Grounds for Challenge

Although the uniform acts and New York statutes enumerate various grounds for invalidating all or part of an agreement, they leave the door open to numerous others. No provision squarely addresses presenting a premarital agreement to the other party shortly before their planned wedding, when invitations have been sent and deposits paid. Many states treat such behavior as a form of duress and grounds not to enforce the agreement. The UPMAA does not define duress, although it does place the burden of persuasion on a party who claims that he or she signed an agreement under duress or otherwise involuntarily. New York case law uses the labels of duress and overreaching for agreements that seem unfair in their substantive terms, or in how they were negotiated, or in both regards.

Section 5 of the UPMAA explicitly states that legal and equitable principles apply to premarital and marital agreements unless the UPMAA displaces them. Oddly, the drafters' comment to ' 5 says that it allows parties to challenge an agreement on the ground of “unconscionability” as a matter of state common law. Perhaps there are two forms of “unconscionability” in UPMAA states, one derived from general contract law and one from UPMAA ' 9(f), which, as noted above, allows courts to refuse to enforce provisions that are “unconscionable at the time of signing.”

Choice of Law

Finally, both uniform acts include choice-of-law provisions. The UPMAA provision basically tracks the Restatement of Conflict of Laws and allows parties to select the law of any jurisdiction that has a significant relationship to the agreement or to either party, unless it is “contrary to a fundamental public policy” of the forum state. If and when the UPMAA becomes widespread, parties who are confident their agreement is valid and enforceable under the UPMAA will be able to exploit that provision to almost ensure that their agreement will be enforced. They will find a UPMAA jurisdiction with some connection to their agreement or either of them or, if need be, sign their agreement in a UPMAA state. They will select that UPMAA jurisdiction's law to govern the validity and enforceability of the agreement. Then, whatever state ultimately considers their agreement, if that state has adopted either the UPMAA or the Restatement of Conflict of Laws, it will apply the UPMAA and enforce the agreement unless a “fundamental public policy” is at stake.

The UPAA's choice of law provision is less thorough; it specifies that parties can choose the law that will govern the construction of their agreement, but it does not explicitly allow them to choose the law that will determine the validity or enforceability of the agreement.

The final part of this article, in an upcoming issue, will discuss the variations in the acts.

Matthew A. Feigin is an attorney at Katsky Korins LLP. The author would like to thank Marcy L. Wachtel for her review and Michael A. Mosberg for encouraging him to research the UPMAA.