Novation Vs Assignment

Novation Vs Assignment-38
When a contract is novated the other contracting party must be left in the same position as he was in prior to the novation being made.A novation requires the agreement of all three parties involved.

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The criteria for a successful novation is the complete acceptance of the liability by the new debtor, the acceptance of the new debtor by the creditor, and the acceptance by the outgoing creditor of the new contract as full performance of the old contract.

Special provincial laws may exist to alter the common law with regards to assignments, such as “judicature acts” and readers are invited to consult these laws for further research.

Sometimes assignment operates under law such as in the case of a bankruptcy where a trustee comes in and takes over all the contracts between the bankrupt and the creditors.

Nor does an assignment require the permission of the other original contracting party.

An assignment is not possible where the services or the consideration was linked to the person of the party which wants to assign the contract.


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