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Deed of Novation

A Deed of Novation transfers a party's contractual rights and obligations to a third party, upon the consent of those two parties and the other party to the contract.


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Document Overview

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

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