Contract Novation: Replacing Parties & Obligations
A contract novation is a substitution of a new contract, obligation, or party for an old contract, obligation, or party. It is, therefore, a type of contract amendment between parties. In litigation, a novation is often used as an affirmative defense to defend a breach of contract claim. The complaining party will allege breach, but then the defendant will state that the substance of the agreement has been materially changed through a novation.
A novation is never presumed by law. The individual asserting novation has the burden of proof as to its existence. In proving a novation, either direct or indirect proof of facts which would constitute the normal elements of a contract — offer, acceptance, etc. — needs to be shown.
Contact us with questions relating to contract amendments, assignments, breaches, or novations.