Meaning & use
Novation
Last updated
The replacement of one party or obligation in a contract with a new one, agreed to by all parties involved.
See it in a sentence
The bank required a novation agreement before it would accept the new borrower in place of the original one.
Through novation, the supplier's contract was transferred to the parent company after the merger.
A note on using this word
Novation differs from a simple assignment because it extinguishes the original contract and creates a new one, releasing the original party from liability.
Words with a similar meaning
substitutionreplacement
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