Legal Definition and Related Resources of Novation

The renewal or remaking of an existing obligation with the express or implied assent of the obligee. A mutual agreement among all parties for discharge of a valid existing obligation by substitution of a new valid obligation by a debtor or another. See Edward Petry & Co. v Greater Huntingdon radio Corp., (D.C.W.Va.) 245 F.Supp. 963. A novation contains four essential elements : 1. a previous valid obligation; 2. an agreement of all parties to the new contract ; 3. a valid new contract; and 4. the extinguishment of the old contract by substituting for same the new one. See Russ v Barnes, 329 A.2d 767, 23 Md.App. 691. It may be effected in t.r.e. ways: 1. by the substitution of a new obligation between same parties with intent to extinguish the old obligation; 2. by the substitution of a new obligor in place of the old one, with intent to release the latter; and 3- by the substitution of a new obligee in place of the old one, with intent to transfer the rights of the latter to the former. See union Bank v Stafford, 12 How. (U.S.) 327, 13 L.Ed. 1008; Gannon v Bronston, 246 Ky. 612, 55 S. W.2d 358.

The substitution of a new obligation for an old, which is thereby extinguished. 57 Wis. 534. The term Is of civil law origin, and is rarely used in the common law. Novation is of three sorts:
(1) Where the debtor and creditor remain the same, but a new debt takes the place of the old one. Here, either the subject matter of the debt may be changed, or the conditions of time, place, etc., of payment.
(2) Where the debt remains the same, but a new debtor is substituted for the old. This novation may be made without the inNOVEL ASSIGNMENT tervention or privity of the old debtor (in this case the new agreement is called expromissio, and the new debtor ex’promissor) , or by the debtor’s transmission of his debt to another, who accepts the obligation, and is himself accepted by the creditor. This transaction is called delegatio. Domat lays down the essential distinction between a delegation and any other novation, thus: That the former demands the consent of all three parties, but the latter that only of the two parties to the new debt.
(3) Where the debt remains the same, but a new creditor is substituted for the old. This also is called delegatio, for the reason adduced above, to wit, that all three parties must assent to the new bargain. It differs from the cessio nominis of the civil law by completely cancelling the old debt, while the cessio nominis leaves the creditor a claim for any balance due after assignment. See Civ. Code Cal. §§ 1530, 1532. To constitute a novation there must be (1) a valid pre-existing obligation ; (2) consent of capable parties; (3) express intention to innovate. The release of the old obligation is a sufficient consideration. 37 Ohio St, 279.

Defeasance whereby the firm’s debt is canceled.

Browse or run a search for Novation in the American Encyclopedia of Law, the Asian Encyclopedia of Law, the European Encyclopedia of Law, the UK Encyclopedia of Law or the Latin American and Spanish Encyclopedia of Law.

Novation in Historical Law

You might be interested in the historical meaning of this term. Browse or search for Novation in Historical Law in the Encyclopedia of Law.

Search for legal acronyms and/or abbreviations containing Novation in the Legal Abbreviations and Acronyms Dictionary.

You might be also interested in these legal terms:

Browse

You might be interested in these references tools:

This definition of Novation is based on the The Cyclopedic Law Dictionary . This entry needs to be proofread.

Vocabularies (Semantic Web Information)

Concept of Novation in the context of Real Property

A short definition of Novation: A contract that releases the obligation of a party to an existing contract and substitutes another party. Differs from assignment or delegation in that all parties must agree and an assignor or delegator is not released of obligation.

Concept of Novation in the context of Real Property

A short definition of Novation: A co
ntract that releases the obligation of a party to an existing contract and substitutes another party. Differs from assignment or delegation in that all parties must agree and an assignor or delegator is not released of obligation.

Novation