Why Novate a Contract?

A novation is an agreement made between two contracting parties to allow for the substitution of a new party for an existing one.

When should you novate a contract?

Novation occurs when A and B are party to an agreement and B 'transfers' its obligations and rights under the agreement to C, such that C can be said to 'step into the shoes' of B, with a resulting contractual relationship coming into effect between A and C.

What does novate a contract mean?

A three-way contract which extinguishes a contract and replaces it with another contract in which a third party takes up the rights and obligations which duplicate those of one of the original parties to the agreement.