Novation Agreement

A novation agreement replaces an existing contract with a new one, substituting parties or obligations and releasing the original party from liability.


ElementDescription
Original contractExisting agreement
SubstitutionNew party or terms replace old
ReleaseOriginal party discharged
Tripartite consentAll three parties must agree
DistinctionNovation vs Assignment
NovationCreates entirely new contract, releases original party
AssignmentTransfers rights only, original party may retain liability
ConsentNovation requires all parties, assignment may not

Related Terms

AssignmentContract TransferParty Substitution Deed of Assignment

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