A novation refers to an arrangement where parties substitute an existing contract and replace one party to the agreement. As a result, a new, third party enters the picture. A Deed of Novation may be used when there is a change in ownership or when a contract is transferred from one party to another. The rights and obligations of the original contract are transferred over to a new contract. The third party will hence incur liability for breaches of the contract.

In this way it is different to assignment, where only the rights under a contract are transferred over. For a deed of assignment, see Deed of Assignment.

A Deed of Novation can help ensure a smooth and seamless transfer of rights and obligations from one party to another.

Use the Deed of Novation if:

You want to substitute an existing contract to replace one party to the agreement.

What does the Deed of Novation cover?

• The conditions precedent that must be met before novation becomes effective;

• The distribution of any expenses in relation to this deed between the parties; and

• The option to execute this deed across counterparts.

Further information

• What Is Novation of Contract?

• What’s the Difference Between Assignment and Novation?