Early Texas jurisprudence held that alimony (periodic payments from a spouse’s future income to an ex-spouse after divorce), including alimony agreements, were against public policy. Then in 1967, the Texas Supreme Court determined in Francis v. Francis that if a divorce agreement included provisions for contractual alimony, such an agreement was enforceable under contract law and would not violate Texas public policy since the alimony was not court-ordered. The Court stated: “[A]pproval of the agreement by the court should not be held to invalidate it as alimony. Amicable settlement by the parties of their property rights should be encouraged, not discouraged.” The court further stated that “such agreements have whatever legal force the law of contracts will give them.”
Contractual alimony is often used in the settlement of divorce cases in which substantial assets cannot be liquidated without significant loss of value and there are insufficient liquid assets to equitably divide the community estate. The down side of using contractual alimony in this manner is that should the obligor default in the payment of the contractual alimony, the obligee does not receive the benefit of his or her bargain. While the obligee may be awarded a judgment from the court for the unpaid alimony, there may be insufficient assets remaining from which the obligee may collect. Past case law has consistently held that because contractual alimony was not court-ordered, it was not enforceable via contempt of court. This was true even when the trial court approved and adopted the parties’ agreements for contractual alimony in the final decree of divorce.
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