What is the Difference Between a Consent Order and a Binding Financial Agreement?

In Short

• Consent Orders are court-approved agreements that formalise property settlements after separation and must be fair and reasonable.
• Binding Financial Agreements (BFAs) are private contracts that divide property without court approval but require strict legal steps to be valid.
• Both options legally record how assets and finances are divided after separation or divorce.

Tips for Businesses

If separation affects business assets, property or finances, choose the option that best protects your interests. Use Consent Orders where court oversight and fairness matter. Use BFAs for privacy and flexibility, but only with proper legal advice. Always consider future enforcement, costs and how the agreement could affect business ownership and financial security.

Summary

This article is an explanation for Australian business owners and individuals on Consent Orders and Binding Financial Agreements under Australian family law. It explains the legal differences between court-approved property settlements and private financial agreements, prepared by LegalVision, a commercial law firm that specialises in advising clients on disputes and litigation.

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Table of Contents

• What is a Consent Order?
• What is a Binding Financial Agreement (BFA)?
• Key Differences
• Key Takeaways
• Frequently asked questions

When you separate from your partner, the process of dividing and allocating assets can be complicated and stressful. When looking to legally document these divisions, two options you can consider are:

• a Consent Order; or
• a Binding Financial Agreement (BFA).

Both documents reflect an agreement made between you and your partner on how you will handle your property in the event of separation or divorce. This article will set out what both a Consent Order and BFA entail and the main differences between the two. 

What is a Consent Order?

A Consent Order is a court-approved agreement that formalises the property settlement between separating parties. Once you and your partner reach an agreement, you apply to the Family Court to have your arrangements converted into legally binding court orders.

What is a Binding Financial Agreement (BFA)?

A BFA is a private contract between you and your partner that outlines how: 

• property; 
• assets; and 
• financial responsibilities will be divided. 

Unlike Consent Orders, BFAs do not require court approval and operate as contractual arrangements between the parties. However, they must meet strict legal requirements to be valid and enforceable. 

Key Differences

Court Involvement

Consent Orders require court approval and become formal court orders once approved by a judge. In contrast, binding financial agreements are private contracts between the parties that do not require court involvement or approval.

However, it is strongly recommended that you obtain it. Adversely, a BFA is only enforceable where both of you have received independent legal advice. If a BFA is prepared without this independent legal advice, the BFA is void and unenforceable. A Certificate of Independent Legal Advice is required to be prepared and signed to show that both of you have received independent legal advice. 

Creation of Documents

Consent Orders can only be made after separation has occurred. However, BFAs can be entered into before marriage, during the relationship or after separation. These are sometimes referred to as a ‘pre-nup’ or a ‘post-nup’.

Is It Fair and Reasonable?

A court will only make orders on your Consent Orders if they think that what you have agreed on is fair and reasonable to both parties.

A BFA may not be fair to both of you, and it is possible that you or your partner may have a more advantageous settlement. However, they may allow for more flexible arrangements, which may suit your circumstances. This is all the more reason why it is important to receive independent legal advice when you are considering entering into a BFA. 

Cost Considerations

BFAs typically involve lower initial costs, as they avoid court filing fees and processes. In contrast, consent orders involve: 

• court application fees; 
• legal representation fees; and 
• the costs of the formal court approval process. 

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Key Takeaways

Even though you are not required to have legal advice to make a Consent Order enforceable, it is highly recommended. You do not want to go to the effort of writing a document that will not be accepted by the court because the agreed-upon terms were not fair and reasonable to both parties. Not only that, but a lawyer will make sure the document adequately reflects the agreement you have reached with your partner. A lawyer can also assist you in providing for any future issues relating to interpreting or enforcing the document. 

If you want to enter into a BFA, you will need to get independent legal advice in order for it to be valid and enforceable. Ultimately, whether you choose to obtain Consent Orders or a BFA, you should consider the differences and ascertain which is more preferable for your circumstances, as well as consult legal advice on the specific requirements you may need. 

However, if you have any other issues regarding disputes and litigation, LegalVision can assist in those matters. LegalVision provides ongoing legal support for Australian businesses through our fixed-fee legal membership. Our experienced lawyers help businesses manage contracts, employment law, disputes, intellectual property and more, with unlimited access to specialist lawyers for a fixed monthly fee. To learn more about LegalVision’s legal membership, call 1300 544 755 or visit our membership page.

Frequently asked questions