'So Hedge therefore, Who Join Forever': Understanding the Interrelation of No-fault Divorce and Premarital Contracts

Abstract

This article explores the interrelation between the availability of no-fault divorce and the enforceability of premarital contracts, exemplified by American and German law. The traditional common law doctrines in the USA and - at least with regard to spousal support - the German civil code of 1900 were similarly hostile towards premarital contracts. In both legal systems divorce was fault based. Conventional wisdom tells us that no-fault divorce and the enforceability of premarital contracts emerged together out of a spirit of liberalization. Yet, by reconstructing the history of both legal institutions, one may observe a more subtle interrelation. The vast majority of jurisdictions in the USA responded to the availability of no-fault divorce with the enforceability of premarital contracts, which reveals a causal relationship. In the case of Germany, it was already in 1938 when the lawmaker introduced through the Ehegesetz (Statute on Marriage) ‘irretrievable breakdown of marriage’ as grounds for divorce, and at the same time legalized premarital contracts on permanent maintenance. From today's perspective, a functional understanding of the interrelation of both legal institutions seems to be the most promising. Family law, criminal law, and tort law are in retreat as protective mechanisms against risks of opportunistic behaviour and hold-ups that may arise through the availability of no-fault divorce. Premarital contracts on the financial consequences of divorce may be apt as an instrument to protect the interests of spouses against such risks. This finding provides a sound justification for contractual freedom in this field and shows that the availability of premarital contracts should be understood as a logical corollary of the availability of no-fault divorce.