Jurisdiction(s):
United Kingdom

Related legal acts

Key definition

Novation definition

What does Novation mean? In practice, novation is the substitution of one contracting party for another, so the outgoing party is released and an incoming party assumes the same rights and obligations under a new contract. It operates by extinguishing the original contract and creating a new one between the continuing party and the incoming party on substantially the same terms, rather than merely transferring rights or liabilities. Usually documented by a tripartite novation agreement (often a deed). A valid novation requires the consent of all parties. In England & Wales, Northern Ireland and Ireland, consideration is required at common law and novations are...

Novation of contracts: practical guidance on consent and consideration, distinctions from assignment/variation, novation by conduct or estoppel, partial novation, limitation, and drafting: warranties, indemnities and claims

Published by a LexisNexis Dispute Resolution expert

Practice notes

What is novation of a contract?

At certain points, rather than transferring the benefit of a contract to a third party, the original counterparties may prefer to discharge their mutual obligations and, effectively, put the arrangement in place afresh, with the third party replacing one of them. This is the usual form of novation. When advising a client, you should understand the conditions for a valid novation and the implications for both the incoming party and the departing novation party once novation occurs, some of which might be avoided at the drafting stage. A Precedent: Novation agreement—long form is available. For a practical overview of novating commercial contracts with links to relevant precedents, see Practice Note: How to novate a contract. For this Practice Note, the parties to the novation are referred to as:

remaining party—(A)
outgoing party—(B)
incoming party—(C)

...

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Jon Chapman

Clarkslegal LLP

Jon is a senior consultant at Clarkslegal LLP. He has experience at senior level in private practice with Clifford Chance, as well as in-house in the energy and media industries. He has extensive experience in Corporate matters, such as mergers and acquisitions and corporate finance, and in Commercial matters, including asset sale and purchase agreements, intellectual property licensing, data protection, contracts for the supply of goods and services and franchising....

Web page updated on 21/05/2026

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