Novation – a term found in both business and contract law – involves a specific type of change to a contract or an agreement where a party replaces another party, or an additional obligation is added, or an obligation is replaced by a new obligation.
Novation is related to, yet distinctly different from an “assignment,” and in some instances, both concepts may be present in an agreement or a contract. In an assignment (with limited exceptions), the other party only needs to receive notice. Yet novation requires the consent of all parties involved with the original agreement – and the replaced/original party is discharged from any future responsibilities or obligations.
Novation agreements are complex and studying several successfully implemented novation agreements can be helpful for understanding, and drafting, such agreements.
Here are some documents dealing with novation currently available in the RealDealDocs database: