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 nov&amacron;ti&omacron;, nov&amacron;ti&omacron;n-, from Latin, a renewing, from nov&amacron;tus, past participle of nov&amacron;re, 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.