It has been said that life is a gamble at terrible odds, if it were a bet you wouldn't take it. While you can't change the odds in the game of life, many people want to fix at least part of the game. In typical American fashion, we reduce life's risks to monetary compensation for possible wrongs. Contracts and insurance now invade the most private and personal areas of our lives. Marriage, one of the most personal interactions in life, is also one of its greatest risks. There is no sure thing.

It is normal and understandable that people with children or property from a former marriage might want to protect these responsibilities and assets from possible abuses in a second marriage. So, too, a business built up with sweat of one's brow or a large inheritance from one's family merits protection from our increasingly divorce prone society. There is no obligation that a marriage be enriched at its inception by the bounty of either party. Nor would it be equitable for a second marriage to reduce the benefits to those who are the natural recipients of one's bounty, the children of a prior marriage. One method of reaching this protected state is through the use of a premarital agreement.

A premarital agreement can set forth rights and responsibilities towards one another and set forth and protect separate property and businesses. It can predetermine the distribution of property upon death or divorce. As such, the document plays an important and useful part in setting to rest possible areas of apprehension or unease in a marriage and can lead to peace and harmony in a relationship. Turner v. Turner, 242 N.C. 533, 89 S.E.2d 245 (1955).

There is a growing trend to use premarital agreements as a form of "hedging the bet against the uncertainties of marriage". There have been reports of premarital agreements that set forth contractual responsibilities to not get fat, to remain faithful, to have a male child, to not nag, or to not drink. Some agreements set forth each party will remain in a certain religion or will continue in a particular profession. Yet, it is also possible to use a premarital agreement to avoid any financial contributions to the marriage.

Premarital agreements can be used not just to protect what one has, but to keep all future earnings separate, so as to deny the marital union any use of funds. In this new use of premarital agreements, a party can come out of marriage with more than one started with, while leaving the other party unemployable and unemployed with literally nothing but the clothes on his or her back. This harsh result is often justified by reducing the marriage to a form of partnership and creating a false impression of equality. It is this possibility which causes concern that in allowing premarital contracts we may have inadvertently opened the door to regressive use of premarital agreements to circumvent equitable distribution and other statutes set up to ensure upon separation or divorce the independence and of both parties.

If you are thinking of having a premarital agreement, be sure that you meet with an attorney and that your future spouse meets with a different attorney. Discuss what you are trying to do with the agreement and why. A creative attorney can craft an agreement that will allow you and your new spouse to enter marriage protecting what you have and allowing you to grow together towards your common marital goals. There are many ways an agreement can be structured that can be fair and equitable to each party.

Uniform Premarital Agreement Act
In North Carolina, all premarital agreements must conform to the requirements of the Uniform Premarital Agreement Act. The Uniform Premarital Agreement Act (hereinafter the AAct) became Chapter 52B of the North Carolina General Statutes in July 1987. Since that time, very few premarital agreements have come before the court for enforcement. In order to examine the enforceability of contracts signed pursuant to the Act, we must look to the requirements of the Act, the law regarding agreements signed before the Act, and the findings of other jurisdictions.

According to NCGS 52B-2, A premarital agreement is an agreement between prospective spouses made in contemplation of marriage and to be effective on marriage. N.C. Gen. Stat. 52B-2 (1987).
A Property means an interest, present or future, legal or equitable, vested or contingent, in real or personal property, including income and earnings. Id. It must be in writing and signed by both parties, but is enforceable without consideration. N.C. Gen. Stat. 52B-3 (1987). It may be amended or revoked after marriage only in writing signed by the parties again, no consideration is needed. N.C. Gen. Stat. 52B-6 (1987). Sections Four and Seven of the Act set forth what can be included and reasons why the agreement may fail.

Section 52B-4 of the Act states:
(A) Parties to a premarital agreement may contract with respect to:

1. The rights and obligations of each of the parties in any of the property of either or both of them whenever and wherever acquired or located;
2. The right to buy, sell, use transfer, exchange, abandon, lease, consume, expend, assign, create, a security interest in, mortgage, encumber, dispose of , or otherwise manage and control property.
3. The disposition of property upon separation, marital dissolution, death, or the occurrence or nonoccurrence of any other event;
4. The modification or elimination of spousal support.
5. The making of a will, trust, or other arrangement to carry out the provisions of this agreement.
6. The ownership rights in or disposition of the death benefit from a life insurance policy;
7. The choice of law governing the construction of the agreement; and
8. Any other matter, including their personal rights and obligations, not in violation of public policy or a statute imposing a criminal penalty.

Section 52B-7, entitled A Enforcement, states:
(A) A premarital agreement is not enforceable if the party against whom enforcement is sought proves that:

1. That party did not execute the agreement voluntarily; or
2. The agreement was unconscionable when it was executed and before execution of the agreement, that party:
   • was not provided a fair and reasonable disclosure of the property or financial obligations of the other party;
   • did not voluntarily or expressly waive, in writing, any right to disclosure of the property or financial obligations of the other party beyond the disclosure provided; and
   • did not have or reasonably could not have had, an adequate knowledge of the property or financial obligations of the other party.

(B) If a provision of a premarital agreement modifies or eliminates spousal support and that modification or elimination causes one party to the agreement to be eligible for support under a program of public assistance at the time of separation or marital dissolution, a court, notwithstanding the terms of the agreement, may require support to the extent necessary to avoid that eligibility. Before the court orders support under this subsection, the court must find that the party for whom support is ordered is a dependent spouse, as defined by G.S. 50-16.1A.

(C) An issue of unconscionability of a premarital agreement shall be decided by the court as a matter of law. N.C. Gen. Stat. '52B-7 (1987).

It would appear that under the terms of the Act, the only issues which cannot be contracted away are child custody and child support. The contract will fail only if it can be shown that: (1) it was signed under duress; or (2) that it fits within the statutory definition of unconscionable. The Act allows the parties to contract away rights to alimony and future support, but limits disclosure to purely property issues. There is no requirement that a prospective spouse be made aware of the future consequences of any action, only that he or she be given full disclosure of the property on the date of the agreement.

II. Execution of the Agreement

North Carolina has long held that premarital agreements are valid because they lead to peace and harmony within the marriage (see Turner v. Turner, 242 N.C. 533, 89 S.E.2d 245 (1955)). Yet, even with this longstanding tradition, there has been little case law interpreting such agreements. As Judge Becton stated in the case of Tiryakian v. Tiryakian, AOur research......reveals a scarcity of North Carolina case law specifically addressing the enforceability of an antenuptial agreement based on the circumstances surrounding its execution. Tiryakian v. Tiryakian, 91 N.C. App 128, 132, 370 S.E.2d 852, 854 (1998). Tiryakian went on to state that a fiduciary duty exists between persons contemplating marriage and held that A.....absent any voluntary waiver, especially considering the confidential relationship between prospective spouses, the failure to fully disclose one's financial status is grounds for invalidating an antenuptial agreement. Id. at 133, 370 S.E.2d at 855. Thereafter, in the case of Howell v. Landry, the Court of Appeals held that, Transactions between [parties with a confidential relationship] ....must be free of fraud, undue influence and duress, and furthermore must also be fair and reasonable. Howell v. Landry, 96 N.C.App. 516, 524, 386 S.E.2d 610, (1989). The burden of proof is on the party seeking to hold the agreement invalid. Defenses of undue influence, duress, fraud, unconscionability and inadequate disclosure are affirmative in nature and require specific pleading. However, the requirement that such transactions be fair and reasonable does not now seem to be a requirement of premarital agreements. Rather, the present court has indicated that no matter how unreasonable or unfair an agreement, if the parties met the requisite formalities in entering the agreement, the court will not look to the underlying fairness or reasonableness of the agreement. (see King v. King 114 N.C.App. 454, 442 S.E.2d 154 (1994).

The case of In re Estate of Pate considered the validity of a signed prenuptial agreement where the scheduled wedding did not take place as planned. In Re Estate of Pate 119 N.C.App. 400, 459 S.E.2d 1 (1995). On April 29, 1992 the parties signed a prenuptial agreement. They later called off their May wedding and discontinued their relationship. Seven months later, in November 1992, the parties reconciled their relationship and were married on December 2, 1992. At the Husband's direction, the Wife placed the prenuptial agreement in a safe deposit box where it sat until the following April when Husband died. Mrs. Pate tried to have the agreement set aside, contending that there was insufficient evidence to support the finding that the agreement was executed in contemplation of their marriage. The court noted:

The premarital agreement recites that the parties contemplate that they will become married sometime in the near future. While the words "the near future" are admittedly susceptible of varying interpretations, the words would seem to encompass a marriage six months or even a year later so long as the marriage occurred within a reasonable time of the parties entering into the premarital agreement. In re Estate of Pate supra at 404.

The court hedged on the issue of whether any agreement would be valid after cancellation of wedding plans and a subsequent reconciliation stating that the intent of the parties would be determined by the language of the agreement and the facts of each case. However, the court noted the policy that prenuptial agreements should be liberally construed, so as to secure the protection of those interests which from the very nature of the instrument it must be presumed were thereby intended to be secured. In re Estate of Pate quoting Stewart v. Stewart 222 N.C. 387, 23 S.E.2d 306, 309 (1942).

Another case raises the issues of duress and unconscionability. In the case of Atassi v. Atassi, a Syrian-American doctor traveled to Syria where he took a bride in an arranged marriage. Atassi v. Atassi, 117 N.C.App. 506, 451 S.E.2d 371 (1995). He and the bride's father signed a marriage contract. Mrs. Atassi states she refused to sign a premarital agreement presented by her husband before the wedding. Later, while living in Fayetteville, Mrs. Atassi acceded to her husband's demands and signed the agreement. After an invalid Syrian divorce, Mrs. Atassi filed for alimony in North Carolina and Dr. Atassi asserted the prenuptial agreement as a bar to equitable distribution and alimony. The court held that if the factual issues raised by the Plaintiff were true, the agreement would be unenforceable and remanded the case to the district court for a hearing on the Plaintiff's prayer for relief. Plaintiff's allegations included that the agreement was signed under duress, after the marriage date, that the agreement was unconscionable, and that she could not reasonably have had adequate knowledge of the defendant's property or financial obligations.

Rather than interpret the agreement, both the above cases involved the validity of the agreement itself, addressing issues surrounding the execution. Likewise, the case of Miller v. Miller (1994) held that a promissory note created with the right of survivorship passed by operation of law outside the will and was, therefore, not affected by the premarital agreement.

The case of King v. King implies that for a premarital agreement to be voidable on the ground of unconscionability, it must be shown to be both procedurally and substantively unconscionable. King v. King concerned the execution of a separation and property agreement which seemed to favor one party. The husband did not have the benefit of counsel prior to signing the agreement and later sought to have it overturned. The court held that separation agreements...property settlement agreements... and premarital agreements...are not enforceable if the terms of the agreement are unconscionable. King v. King, supra p 457. However, the court went on to note that:

Unconscionability has both procedural and substantive elements. Procedural unconscionability involves 'bargaining naughtiness' in the formation of the contract, i.e. fraud, coercion undue influence, misrepresentation, inadequate disclosure. Substantive unconscionability involves the harsh, oppressive, and one-sided terms of a contract i.e., inequality of the bargain. The inequality of the bargain, however, must be so manifest as to shock the judgment of a person of common sense, and ...the terms...so oppressive that no reasonable person would make them on one hand and no honest and fair person would accept them on the other. King v. King, supra at 458.

III. How the Courts Have Construed the Meaning of Agreements Fairness in execution seems to be based upon full disclosure of assets and an opportunity to obtain independent counsel. There is a growing trend for courts to eliminate a substantive review of fairness if procedures are in order. However, this trend seems to devalue marriage to a bargained for exchange. Unlike most contracts, premarital agreements contemplate a lifelong agreement which can result in greatly changed circumstances. Although contracts by nature allocate risk, the parties might not bargain with the full range of possible future events in mind. When parties enter into a premarital agreement, they cannot be aware of all the future will hold. While it is not the role of the court to void premarital agreements, merely because one party receives a better result than the other, the court should have the ability to protect parties against a failure to foresee the events and circumstances which might exist at the date of divorce. Even understanding the dire nature of the provisions of a premarital agreement,

....romantic exuberance might lead a spouse to underestimate the likelihood of divorce and the importance of financial planning. Scott, Rational Decision Making About Marriage and Divorce, 76 Va. Law Review 9, 79-96 (1990).

The question arises of whether it is the role of the courts to protect people from their own weaknesses. When a person is confronted with a statement couched in terms of validating love ("If you sign the agreement, I'll know you really love me, not my money"), or preventing the recurrence of past wrongs ("You know how awful Suzie was and how she really stuck it to me. This is for my own insecurity. I know you'd never do the same"), or is so certain that their love is forever that they are willing to sign anything, no matter how one sided, is it the duty of our courts to protect that person? Our law is filled with laws which protect people against their own bad judgment such as those laws against confidence games, ponzi schemes, and pyramids. There are civil remedies for fraud in the inducement and promise without intent to perform.. The courts also guard against overreaching or contracts of adhesion.

IV. Interpretation and Enforceability In order for a premarital agreement to be valid in North Carolina, it must be signed by the parties in contemplation of a marriage which then occurs, and there must a full and fair financial disclosure, and a lack of duress or undue influence. The statute is written inclusively. NCGS 52B-7(a)(2) does not allow for a waiver in lieu of disclosure. It states that if the agreement is unconscionable and there was not full disclosure and not a waiver of further disclosure, and a lack of adequate knowledge of property or financial obligations (both assets and obligations), then the agreement is invalid. N.C. Gen. Stat. 52B-7 (1987). Read the agreement carefully. Be sure that it complies with the statutory requirements.

A premarital agreement is valid if it complies with the requirements of the Uniform Premarital Agreement Act. While there is dicta that the court in North Carolina does not intend to look beyond procedural unconscionability in determining the validity of a premarital agreement, there is no case law on point.