What is Novation?
Novation suggests that the original or old contract be replaced with a new one. The parties to the new contract can be the same, or they might be different. The conditions of the contract could alter, or they might not. Furthermore, the new contract’s consideration is derived from the existing contract’s discharge. It is important to remember that a novation cannot take effect unless all parties to the original contract agree to it; in such a case, the original agreement will remain in effect. Novation must take place before the period for performing the real contract expires; otherwise, there will be a breach of contract between the parties. Additionally, should a new contract be signed after the term has expired, it will be done so to modify any remedial rights that resulted from the contract’s violation.
Key Features of Novation:
- 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 their contractual responsibilities, and the new party or duty essentially replaces the old one.
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