When two corporations enter into a commercial contract, their legal teams negotiate a termination clause that clearly sets out how the contract will finish. Properly done, there will be no question about how the corporations will split and go their own ways when the commercial “marriage” comes to an end. From a contract law perspective, the written clause outlining how the relationship will conclude is extremely important because it provides clear guidelines that protect all parties involved. When two individuals get married, those protections do not exist.
To be clear, this article is not pro or anti marriage. So it should not be construed as attempting to convince anyone to avoid marriage. The purpose of this article is to provide some information on the legal framework involved in a marriage contract, and the risks each party undertakes when entering, and importantly, dissolving such a contract.
What’s Yours is Ours
All parties should understand that property acquired during the course of a marriage belongs to all the partners. This is referred to as “community property” in most states. The community property standard started to become the norm in the middle of the 20th century. This means that when the parties get divorced, property acquired during the marriage is split 50/50. It does not matter if one party was the breadwinner while the other earned little income. The Courts are not interested in who contributed what in acquiring the property. The Courts are really interested in assessing the value of community property, and ensuring that the proceeds are distributed equally among the divorcees.
When couples fight during a divorce, sometimes lawyers try to persuade the Court that one individual had put more work into property acquisition during the course of the marriage. These arguments usually go nowhere, as community property rules mean that judges are interested in achieving a 50/50 split after the divorce.
Payments after Breakup
After a commercial contract is terminated, the parties make final payments (for services previously rendered) and go their own way. Some contracts have a provision called a “liquidation clause”, which enables a specific payment by one party to the other in the event the contract is breached. Either way, in most circumstances when the agreement comes to an end, payments between the parties also come to an end. This is definitely not the case with a marriage contract.
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Even after a divorce, payments from one party to another can be ordered by the Court, and sometimes can go on indefinitely. These payments can be in the form of alimony, palimony, and when children are involved, child support payments. Before the marriage, some parties sign a prenuptial agreement stating that all payments end upon divorce. However, unlike with commercial contracts (where the Courts make their best efforts to ensure the parties abide by the written agreement) , a judge will overrule the no-payments clause in the prenuptial. This could be for numerous reasons, including that one spouse will be economically disadvantaged without ongoing payments from the other.
When it comes to child support, almost every state has a rule that those payments cannot be waived by a prior agreement between the parents. Child support payments will be enforced, regardless of the previous wishes of the parties to the marriage. This is because of the legal doctrine that child support money belongs to the child, and not the parents, and as such, the parents are unable to waive rights to money that does not belong to them.
Child support, alimony, and palimony payments will be enforced by the government through wage deductions. This ensures that those payments are made, even if there is little money left over for the wage earner afterwards. Child support payments are enforced usually until the child turns 18. Alimony and palimony are enforced based on various factors, most of which are outside the control of the person making the payments. In certain cases, alimony and palimony obligations can last for the rest of someone’s life.