Difference between Novation and Alteration
Basis |
Novation |
Alteration |
---|---|---|
Meaning |
Novation is the term used when the parties agree to replace the previous contract with the new one. |
With the parties’ approval, an alteration is a revision or modification of the contract’s terms and conditions. |
Parties |
Parties could differ or be the same. |
The parties don’t change. |
Terms and Conditions |
The terms and circumstances of the contract could change, or they might not. |
The contract’s terms and conditions are always subject to change. |
Substitution of Contract |
The previous contract is replaced with the new one. |
Substitution might not always be necessary. |
Consent of Parties |
All parties involved must agree to the substitution of the contract. |
All parties involved must agree to the changes in the contract. |
Legal Consequences |
Novation typically extinguishes the rights and obligations under the original contract. |
Alteration does not necessarily extinguish the original rights and obligations, but modifies them. |
Timing |
Novation must occur before the expiry of the original contract’s performance period. |
Alteration can happen at any time during the lifespan of the contract. |
Difference between Novation and Alteration
Novation and Alteration are legal concepts that both involve changes to contracts, but they differ significantly in their nature and implications. Novation is a legal term that refers to the transfer of one obligation or party to another. In a novation, each party consents to having the original party or obligation replaced with a new one. The original party is liberated from its contractual responsibilities, and the new party or duty essentially replaces the old one. In contrast, Alteration refers to a legal notion that modifies the terms of an already-existing contract. Any portion of the contract, including the parties engaged, each party’s duties, and the terms and circumstances of the agreement, may be changed.
Table of Content
- What is Novation?
- What is Alteration?
- Difference between Novation and Alteration
- Conclusion
- Difference between Novation and Alteration- FAQs