What is the definition of novation in contract law?

Novation in contract law refers specifically to the substitution of one or more parties in an existing contract, replacing them with new parties while maintaining the original contractual obligations. This process ensures that the new party takes over the rights and obligations of the original party, effectively releasing the original party from any further responsibility under the contract.

This is distinct from other concepts in contract law. For instance, termination of obligations implies that the contract is ended without transferring any rights or obligations to another party, which is not the case in novation. Similarly, the creation of a new obligation refers to establishing an entirely new contract, rather than altering an existing one with the inclusion of new parties. Modification involves changing the terms of the existing contract but does not necessitate the change of parties involved. Therefore, the defining characteristic of novation lies in the replacement of original parties, effectively altering who is responsible for fulfilling the contractual duties.