What is a novation?

What is a novation?

• A. Agreement to substitute a new party for an existing one
• B. The original parties must all agree
• C. If the seller delegates duties without buyer's consent, the buyer has no remedy against the original seller
• D. A novation requires new consideration

Answer: (A)

Novation means substituting a new party for an existing one, with the old contract discharged and a new contract formed between the remaining party and the new party. The crucial point is that all affected parties consent to the substitution, and the old party is released from liability while the new party assumes the obligations. New consideration isn’t required for this substitution—the act itself creates the new relationship and ends the old one. The option that states substitution of a new party best captures this concept; the others either describe delegation or require conditions (like new consideration) that don’t apply to novation.

Novation means substituting a new party for an existing one, with the old contract discharged and a new contract formed between the remaining party and the new party. The crucial point is that all affected parties consent to the substitution, and the old party is released from liability while the new party assumes the obligations. New consideration isn’t required for this substitution—the act itself creates the new relationship and ends the old one. The option that states substitution of a new party best captures this concept; the others either describe delegation or require conditions (like new consideration) that don’t apply to novation.