What is novation?
Novation replaces a party or obligation in a contract with a new one, releasing the old one.
Why it matters
It cleanly swaps a party without leaving the original on the hook.
Common confusion
Novation replaces a party; assignment only transfers rights, not duties.
Frequently Asked Questions
Does everyone have to agree?
Yes — all affected parties must consent to the novation.
Is novation the same as assignment?
No — assignment moves rights; novation swaps a party and releases the old one.
Example?
A buyer’s lender pays off the seller’s loan and substitutes itself.