Child Support - Agreements - Limited vs Binding


Pursuant to the current child support legislation, there are two forms of Child Support Agreements available – a Limited Agreement and a Binding Agreement.

Limited Agreement provides for a greater degree of flexibility in relation to changing Child Support Agreements in the future. Whilst the Agreement can include long term provisions, once the Agreement has been in place for 3 years, either party can elect to terminate it. The Limited Agreement can also be terminated if the circumstances of either party change in a way not anticipated by the Agreement, and one such trigger is if the assessment that would other be undertaken by the Department of Human Services changes by at least 15%.

A Limited Agreement allows both parties to choose to end the Agreement if it no longer suits their circumstances in the future. To enter into a Limited Agreement, the parties do not have to obtain legal advice. However, an administrative child support assessment by the Department of Human Services must be in place before the Agreement can be accepted and the annual rate of child support payable under the Agreement must be equal to or more than the assessed amount.

The alternative to a Limited Agreement is a Binding Agreement. Binding Agreements are, as the name implies, binding and for the long term. They are intended to provide a high level of certainty and finality about child support arrangements for the future and are difficult to change in the absence of agreement.

Because of the more serious nature of a Binding Child Support Agreement, each party must have received independent legal advice as to the effect and advantages or disadvantages of the Agreement before it is signed. The solicitor who provides this advice must sign a certificate which verifies that this advice was given. If the parties agree to end the Agreement before the agreed nominated end date, they must once again seek independent legal advice and make a formal Termination Agreement, or a new Binding Agreement that terminates the previous Agreement.

If either party otherwise wishes to unilaterally terminate a Binding Agreement, an application must be made to the Court to set the Agreement aside. Pursuant to section 136(2) of the Child Support (Assessment) Act 1989, a Court may set aside a Binding Child Support Agreement if it is satisfied as to the following:

  • that the party’s agreement was obtained by fraud or a failure to disclose material information; or
  • that another party to the agreement, or someone acting for another party
    • exerted undue influence or duress in obtaining that agreement, or
    • engaged in unconscionable conduct or other conduct

to such an extend that it would be unjust not to set aside the agreement; or

  • in the case of a Limited Child Support Agreement:
    • that because of a significant change in the circumstances of one of the parties to the agreement, or a child in respect of whom the agreement is made, it would be unjust not to set the agreement aside; or
    • that the agreement provides for an annual rate of child support that is not proper or adequate, taking into account all of the circumstances of the case (including the financial circumstances of the party to the agreement); or
  • in the case of a Binding Child Support Agreement, because of the exceptional circumstances, relating to a party to the agreement or a child in respect of whom the agreement is made, that have arisen since the agreement was made, the applicant or the child will suffer hardship if the agreement is not set aside.

As can be seen, the Court will only make such an order in limited circumstances.

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