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Contracts/Novation: Difference between revisions
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'''Novation''' is a term used in [[contract law]] and [[business law]] to describe the act of either replacing an obligation to perform with a new obligation, or replacing a party to an agreement with a new party. A novation must be agreed upon by all original parties to the original agreement. | '''Novation''' is a term used in [[contract law]] and [[business law]] to describe the act of either replacing an obligation to perform with a new obligation, or replacing a party to an agreement with a new party. A novation must be agreed upon by all original parties to the original agreement. | ||
Novation is also used in futures/options trading markets to describe a special situation where the clearing house takes all positions with all the brokers, buying all the brokers sell, and selling all that the brokers buy. | |||
In business, novation is typically the process by which a newly formed [[corporation]] assumes the pre-incorporation liabilities incurred by its founders. | In business, novation is typically the process by which a newly formed [[corporation]] assumes the pre-incorporation liabilities incurred by its founders. | ||
Revision as of 22:34, October 3, 2005
- This article is on the legal term; for the company, see Novation Electronic Music Systems.
Novation is a term used in contract law and business law to describe the act of either replacing an obligation to perform with a new obligation, or replacing a party to an agreement with a new party. A novation must be agreed upon by all original parties to the original agreement.
Novation is also used in futures/options trading markets to describe a special situation where the clearing house takes all positions with all the brokers, buying all the brokers sell, and selling all that the brokers buy.
In business, novation is typically the process by which a newly formed corporation assumes the pre-incorporation liabilities incurred by its founders.
