What is a novation of a contract?

A novation of a contract is a legal process in which one or more parties to an existing contract are replaced by new parties. This process requires the agreement of all parties to the contract and often requires the consent of a court. In California contract law, a novation of a contract is a way for parties to the contract to add new parties or rearrange their roles in the contract without invalidating the agreement. A novation is not the same as a modification, which is a change to the terms of the agreement without involving any new parties. A novation revokes the old contract and replaces it with a new one that includes the new parties. In this way, a novation allows new parties to enter into the contract in a way that doesn’t completely void the existing agreement. It also allows any existing parties to exit the contract without voiding the agreement. When parties want to novate a contract, they must agree to the new terms and sign off on the new agreement. Generally, both the original parties and the new parties must agree to any changes required to make the novation valid. The process can be time-consuming and complex, so seeking legal advice is generally recommended.

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