Section 21 of the PRA gives couples and intentional couples the right to enter into any agreement they wish to opt out of the PRA with respect to the status, ownership and division of their property, whether it is an existing property or a future property. Couples choose not to do so by entering into a Section 21 contract. An agreement can classify the property and, like spouses and partners, settle all ownership disputes between them. It is important that the contracting regime cannot be used to enforce the rights of creditors. It is important to review the terms of an agreement over time. It is impossible to anticipate any event that might occur and change circumstances, and it may be that, over time, the terms of an agreement must be addressed. The court can only defer a contractual agreement if it results in a „serious injustice“. This may be the case z.B. if an agreement is very one-sided and does not allow a partner to participate in the property acquired during the relationship.
There is no definition of „serious injustice“ in the law, but the courts have held that serious injustice is a broad discretion that must be exercised in light of the policy underlying the legislation. A simple disparity of the result at the time of separation is not enough to commit a „serious injustice“. Section 21 agreements are generally concluded in circumstances in which a party holds the assets and pushes for an agreement and may raise the question of whether the relationship will continue in the absence of an agreement. Therefore, the existence of such circumstances is not relevant to the issue of „serious injustice“ in general. This can be a difficult threshold to reach. Whether the proposed agreement is at the beginning of a relationship, during a relationship or at the end of the relationship, the directors of the trust may have to consider considerations other than the couple trying to organize their affairs. Directors have a duty to act fairly among all beneficiaries of a trust and simply cannot accept what a couple wants. The Property (Relationships) Act 1976 („PRA“) works like a code. This means that once a relationship is involved under the law, the law applies instead of other rules and agreements that may have been concluded. An exception to this rule is the Section 21 agreements that allow parties (spouses or partners) to enter into contracts from the PRA and enter into their own agreements on the „status, ownership and division“ of their assets. These agreements are concluded in two forms. Compromise agreements that can be reached after separation (s 21A) and the conclusion of the contract, which can be concluded at any time before or during the relationship (S 21).
Certain conditions must be met for an agreement to be valid under the law and traditionally the courts will apply them strictly.