Novation

Definition: A novation replaces an existing valid contractual obligation with a new valid obligation, with the agreement of all necessary parties and the intent to discharge the original obligation.

Example

A landlord, outgoing tenant, and incoming tenant agree to substitute the new tenant and expressly release the outgoing tenant from the obligation being replaced.

Keep the distinction clear

Assignment alone is not a release. Look for agreement to replace and discharge the old obligation, not merely permission for someone else to perform. A novation can change the obligated party or substitute a new obligation.

Related terms

Assignment · Leasehold Estate

Keep studying

Valid, Void, Voidable, and Unenforceable Contracts

References: Florida Fifth District Court of Appeal: assignment and novation

Pronunciation (US): noh-VAY-shun (capitals show stress)

Pronunciation reference: Merriam-Webster