Novation is defined as which of the following?

Novation is defined as which of the following?

• A. A new contract!
• B. An amendment to an existing contract
• C. A transfer of property without consent
• D. A mortgage refinancing

Answer: (A)

Novation is the substitution of a new contract for an existing one, with the old agreement extinguished. This requires the consent of all parties and results in a fresh contract that replaces the prior obligations. It’s different from simply amending a contract, which leaves the original agreement in effect but changes its terms. It’s also not about transferring property without consent or refinancing a mortgage, which involve separate concepts. Among the options, the notion of a new contract best captures novation because it emphasizes creating a distinct agreement that replaces the old one.

Novation is the substitution of a new contract for an existing one, with the old agreement extinguished. This requires the consent of all parties and results in a fresh contract that replaces the prior obligations. It’s different from simply amending a contract, which leaves the original agreement in effect but changes its terms. It’s also not about transferring property without consent or refinancing a mortgage, which involve separate concepts. Among the options, the notion of a new contract best captures novation because it emphasizes creating a distinct agreement that replaces the old one.