Harnish v. Harnish (2017) & Handling Unreasonable Settlement Agreements

Like prenuptial and postnuptial agreements, private marital settlement agreements – i.e. agreements which settle property division in divorce – are contracts, and as such they are governed by the same core principles which govern all other contracts. This is something which many laypeople are unaware of; many laypeople are under the impression that these agreements are somehow “special,” and outside the strictures which apply to all contractual agreements. The truth is that private marital settlement agreements must follow basic principles of contract law, otherwise they may be invalidated. As an example, if a marital settlement agreement is found to be “unconscionable,” then the agreement can be overturned, even if that agreement was executed correctly in all other respects.

The doctrine of unconscionability came up in the case of Harnish v. Harnish back in 2017. Let’s take a closer look at this important case.

Facts of the Case

The husband and wife in this case were married for roughly 6 years before separating in 2015. Very soon after the separation, the husband had his attorney draft a marital settlement agreement which was heavily skewed in his favor. Under the agreement, the husband gained full ownership of the marital home, two motorcycles, two automobiles, two rental houses, and both retirement accounts. The wife was to receive a single lump sum payment of $7,000. Also, the wife would not receive any alimony, either rehabilitative or permanent. This whole agreement was put together and submitted to the wife for signing within days after the separation. The wife signed the agreement, without any advice from an attorney.

The husband sought to enforce the terms of the agreement in the final divorce decree immediately after the wife signed the document. In Maryland, a marital settlement agreement may be deemed “unconscionable” if the terms are too skewed in one party’s favor. To qualify for unconscionability – or, more precisely, for “substantive unconscionability” in Maryland law – the terms cannot simply favor one party by a small margin, the terms must be extremely lopsided such that no person would see the terms as objectively reasonable. The wife attempted to block the enforcement of the agreement on the grounds that the agreement was substantively unconscionable.

Outcome & Discussion

Ultimately, the court concurred with the wife that the terms of the agreement were substantively unconscionable and the agreement was invalidated. Unconscionability is an interesting legal doctrine because it can invalidate an agreement which is facially valid. In this case, for instance, the wife clearly signed the agreement voluntarily, and was under no apparent coercion or duress. However, she was not represented by counsel, and was underemotional distress as a consequence of the recent separation. These circumstances may be sufficient to invoke the doctrine of unconscionability. Normally, analyses involving unconscionability examine the relationship between the parties, and they concentrate on how the relationship between the parties translates into differences in “bargaining power.” Differences in bargaining power are often the root of skewed contractual terms. In this case, the bargaining power of the parties was not the issue, but the terms were still patently unreasonable because of the huge imbalance between the amounts each party received. In the end, the court determined that this was enough to find substantive unconscionability.

Contact the Murphy Law Firm for Additional Information

If you want to know more about the doctrine of unconscionability, or about private marital settlement agreements, or another related matter, contact one of the family law attorneys at the Murphy Law Firm today by calling 240-219-8825.