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Under novation, all of the rights and obligations of one party is transferred to a third party by way of a replacement contract. The original contract is terminated and unenforceable. Under assignment, usually only some of the rights of one party are transferred to a third party.

Sometimes, a novation is called a ?Hail Mary? defense for someone trying to avoid contractual liability. To establish novation, however, requires a rather high standard. By contrast, assignment and assumption only transfer a party's contractual rights and benefits.

However, an assignment cannot have any adverse effect on the duties of the other party to the contract, nor can it diminish the chance of the other party receiving complete performance. The assignor normally remains liable unless there is an agreement to the contrary by the other party to the contract.

Contracts, in general, are freely assignable, which means that either party can transfer its contractual obligations or rights to a third party. But sometimes contracts include anti-assignment clauses to limit or prohibit assignment.

What is a Transfer And Assignment Agreement? A transfer and assignment agreement is a legal document that outlines the terms and conditions of the transfer of an employee from one company to another. It also includes the assignment of all rights and obligations, including any IP or confidential information.

Novation vs Assignment On the other hand, novation requires mutual consent of all parties to the agreement. Assignment is possible as long as a notice is sent to the other party. In a novation, all the rights and obligations of the original party are transferred to the third party.