Q&As

Is it possible to novate part of a contract in order to allow the outgoing party to continue to benefit from a software licence granted under the novated contract?

read titleRead full title
Published on LexisPSL on 16/03/2018

The following Commercial Q&A provides comprehensive and up to date legal information covering:

  • Is it possible to novate part of a contract in order to allow the outgoing party to continue to benefit from a software licence granted under the novated contract?
  • Novation vs assignment
  • Novating part of contract
  • Requirement

Is it possible to novate part of a contract in order to allow the outgoing party to continue to benefit from a software licence granted under the novated contract?

Novation vs assignment

Novation should be distinguished from assignment.

Novation occurs when A and B are party to an agreement and B 'transfers' both their obligations and rights under the agreement to C, such that C can be said to 'step into the shoes' of party B. The result of a novation is a new contractual relationship between A and C, and the contract between A and B being extinguished.

An assignment is 'an immediate transfer of an existing proprietary right, vested or contingent from one party to another'. ‘Assigning a contract' is concerned with transferring a party's rights under the contract only, and not the transfer any of their obligations, a third party. In a contract between A and B, B can choose to assign their rights under the contract to C. The result of an assignment is that the original contract between A and B remains in place, no new contract between A and C is established, but C receives a benefit of the original contract which was originally the benefit of B.

For further information, see Practice Notes: What constitutes a valid assignment of a contract? and Novation—why and how to novate a contract.

Novating part of contract

The

Related documents:

Popular documents