NOVATION

novation (noh-vay-sh<<schwa>>n), n.1. The act of substituting for an old obligation a new one that either replaces an existing obligation with a new obligation or replaces an original party with a new party. • A novation may substitute (1) a new obligation between the same parties, (2) a new debtor, or (3) a new creditor. 2. A contract that (1) immediately discharges either a previous contractual duty or a duty to make compensation, (2) creates a new contractual duty, and (3) includes as a party one who neither owed the previous duty nor was entitled to its performance. — Also termed substituted agreement; (Scots law) innovation.; (Roman law) novatio (noh-vay-shee-oh). See STIPULATIO AQUILIANA; substituted contract under CONTRACT; ACCORD(2). [Cases: Novation 1. C.J.S. Novation §§ 2–4, 9–10, 14–16.] — novate (noh-vaytornoh-vayt), vb. — novatory (noh-v<<schwa>>-tor-ee), adj.

“Novation is the emerging and transfer of a prior debt into another obligation either civil or natural, that is, the constitution of a new obligation in such a way as to destroy a prior one.” Ulpian, D. 46.2.1 pr.

“The only way in which it is possible to transfer contractual duties to a third party is by the process of novation, which requires the consent of the other party to the contract. In fact novation really amounts to the extinction of the old obligation, and the creation of a new one, rather than to the transfer of the obligation from one person to another. Thus if B owes A £100, and C owes B the same amount, B cannot transfer to C the legal duty of paying his debt to A without A’s consent. But if A agrees to accept C as a debtor in place of B, and if C agrees to accept A as his creditor in place of B, the three parties may make a tripartite agreement to this effect, known as novation. The effect of this is to extinguish B’s liability to A and create a new liability on the part of C.” P.S. Atiyah, An Introduction to the Law of Contract 283 (3d ed. 1981).

“The word ‘novation’ is used in a variety of senses. Courts frequently use it as synonymous with ‘substituted contract.’ Most academic writers and both contracts restatements, however, restrict its use to describe a substituted contract involving at least one obligor or obligee who was not a party to the original contract…. The development of a separate category under the rubric ‘novation’ is doubtless traceable to problems of consideration formerly thought to be present in such contracts because of the former common law rule that consideration must be supplied by the

promisee. This rule has long been laid to rest almost everywhere.” John D. Calamari & Joseph M. Perillo, The Law of Contracts § 11–8, at 444–45 (3d ed. 1987). objective novation.Civil law. A novation involving the substitution of a new obligation for an

old one. [Cases: Novation 4. C.J.S. Novation §§ 2, 11–14, 29.]

subjective novation.Civil law. A novation involving the substitution of a new obligor for a

previous obligor who has been discharged by the obligee.

[Blacks Law 8th]