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Consent to novation does not have to be given in writing. Consent can be given verbally, and it can also be inferred by conduct. In practice, written consent would normally be given. In any event, the new contract following novation would effectively amount to written consent.

Do you need a deed of novation for your situation? The answer is usually no, as an agreement is fine. The exception to the rule is that if the original contract was signed as a deed, you need to use a deed to novate it.

Both original contracting parties must agree to the novation. Generally, novation is sometimes called a substituted contract. In this context, a novation is a new obligation that extinguishes and replaces an old contract or obligation.

Key Takeaways. To novate is to replace an old obligation with a new one. In contract law, a novation replaces one of the parties in a two-party agreement with a third party, with the agreement of all three parties. In a novate, the original contract is void.

The Bottom Line. In a novation, when all parties agree, one party in a two-party agreement gives up all rights and obligations outlined in a contract to a third party. As a result, the original contract is canceled.

A novation occurs when a party would like to transfer both the benefits and the burden within a contract to another party. Similar to assignment, the benefits are transferred, but unlike assignment, the burden is also transferred.

A novation is an agreement made between two contracting parties to allow for the substitution of a new party for an existing one.

There are certain risks of a novation. If the counterparty is unsure that the new party will be able to adequately complete obligations set under the contract, the counterparty might face consequences in the future but will not be able to hold the primary party accountable after novation.