Q&As

When should a novation of a contract be executed as a deed and when can it be signed as a simple agreement?

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Published on LexisPSL on 14/11/2017

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

  • When should a novation of a contract be executed as a deed and when can it be signed as a simple agreement?

When should a novation of a contract be executed as a deed and when can it be signed as a simple agreement?

Novation is the method by which the parties to an existing contract 'transfer' the rights and obligations of that contract to a third party. Novation is not strictly a transfer of rights and obligations but a discharge of the rights and obligations between contracting parties and a recreation of them with a third party (replacing an original contracting party) and one (or more) of the contracting parties to the original contract.

The essential requirements for a valid novation of a contract are:

  1. consideration, and

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