Law the substitution of a new obligation or contract for an old one by the mutual agreement of all parties concerned
Origin of novationLate Latin novatio from Classical Latin novare, to make new from novus, new
The substitution of a new contract for a previous contract, or the substitution of a new party for a previous party in a contract, so that the previous obligation is considered discharged or the previous obligor released.
Origin of novationLate Latin novātiō novātiōn- from Latin a renewing from novātus past participle of novāre to make new from novus new ; see newo- in Indo-European roots.
- (law) Replacement of a contract with one or more new contracts, in particular in financial markets the replacement of a contract between a particular buyer and seller with contracts between the clearing house and each party.
- (law) A new contract between the original contracting parties whereby the first obligation is extinguished and a new obligation is substituted.
novation - Legal Definition
In contract law, the replacement of an old obligation with a new one.