What is a novation of a contract?

Novation of a contract is a legal term that refers to the process of replacing one party in a contract with another party. This is done by creating a completely new agreement between the original two parties, who then must agree to the new terms. In Virginia, a novation must be in writing, signed by all parties, and accepted by the parties in order to be legally valid. For example, if Party A and Party B sign a contract, but Party A decides that they no longer want to be involved, they can enter into a novation of contract with Party C. A novation creates a new binding agreement between Parties B and C. Novation is different than an assignment, which is when one party transfers their rights and obligations under an existing contract to another party. The original party is still liable under the contract. In a novation, the original party is released from their obligations and has no further liability to either party. Novation of a contract is an important legal tool to consider when parties involved in a contract change and the existing agreement needs to be modified. It is important to consult a qualified lawyer to ensure that all parties are bound properly and that the new agreement follows Virginia state contract law.

Related FAQs

What is rescission of a contract?
What is a mutual rescission of a contract?
What is a promissory note?
What is a third-party beneficiary?
What is acceptance of a contract?
What is the effect of an ambiguity in a contract?
What is a contract of employment?
What is the effect of a breach of contract?
What is a mutatis mutandis clause?
What is the common law?

What is a novation of a contract?

Related FAQs

Related Blog Posts