Contract Novation Agreement Template

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This Contract Novation Agreement (the “Novation Agreement”) is entered into as of [Effective Date] by and among:

Continuing Party: [Full Legal Name], with an address at [Address] (“Continuing Party”).

Outgoing Party: [Full Legal Name], with an address at [Address] (“Outgoing Party”).

Incoming Party: [Full Legal Name], with an address at [Address] (“Incoming Party”).

The parties above may be referred to individually as a “Party” and collectively as the “Parties.”

1. Background

1.1 Original Agreement. The Parties entered into [Name of Original Contract] dated [Original Effective Date] (the “Original Agreement”).

1.2 Purpose. The Parties desire to novate the Original Agreement by replacing the Outgoing Party with the Incoming Party under the terms of this Novation Agreement.

2. Novation and Effective Date

2.1 Novation. Effective as of [Novation Effective Date] (the “Novation Date”), the Incoming Party is substituted for the Outgoing Party in the Original Agreement.

2.2 Continuation. Except as modified by this Novation Agreement, the Original Agreement remains in full force and effect.

2.3 Transferred Rights and Obligations. From the Novation Date, the Incoming Party assumes all rights, duties, and obligations of the Outgoing Party under the Original Agreement.

3.1 Assumption. Incoming Party agrees to perform and be bound by the Original Agreement as if it were the original contracting party.

3.2 Consent. Continuing Party consents to the novation and accepts Incoming Party as the replacement party.

3.3 Release Option.

☐ Release Outgoing Party from future obligations after the Novation Date (recommended)

☐ Do not release Outgoing Party (Outgoing Party remains liable as stated in Section 4)

4. Liabilities Before and After Novation

4.1 Pre-Novation Liabilities. Outgoing Party remains responsible for obligations, breaches, and liabilities accrued before the Novation Date, unless stated otherwise: [Alternate terms].

4.2 Post-Novation Liabilities. Incoming Party is responsible for obligations and liabilities arising on or after the Novation Date.

4.3 Payments and Invoices.

Payments due for periods before the Novation Date: owed to/from [Outgoing Party].
Payments due for periods on/after the Novation Date: owed to/from [Incoming Party].

4.4 Open Items. Any open invoices, credits, or disputes as of the Novation Date: [List].

Payments due for periods before the Novation Date: owed to/from [Outgoing Party].

Payments due for periods on/after the Novation Date: owed to/from [Incoming Party].

4.4 Open Items. Any open invoices, credits, or disputes as of the Novation Date: [List].

5. Notices and Contact Updates

5.1 Updated Notice Details. As of the Novation Date, notices under the Original Agreement must be sent to:

Continuing Party: [Name/Address/Email]
Incoming Party: [Name/Address/Email]

5.2 No Other Changes. Except for the party substitution and notice updates, all other notice terms remain unchanged.

Continuing Party: [Name/Address/Email]

Incoming Party: [Name/Address/Email]

5.2 No Other Changes. Except for the party substitution and notice updates, all other notice terms remain unchanged.

6. Representations

6.1 Authority. Each Party represents it has authority to enter into this Novation Agreement.

6.2 No Conflict. Each Party represents this Novation Agreement does not violate other agreements binding it.

6.3 Original Agreement Validity. The Parties confirm the Original Agreement remains valid and enforceable as of the Novation Date, except as disclosed: [Disclosures, if any].

7. Miscellaneous

7.1 Governing Law. This Novation Agreement is governed by the laws of [State/Country].

7.2 Entire Agreement. This Novation Agreement, together with the Original Agreement, is the entire understanding regarding the novation.

7.3 Counterparts. This Novation Agreement may be signed in counterparts.

7.4 Electronic Signatures. Electronic signatures are effective.

7.5 Severability. If any provision is unenforceable, the remainder remains effective.

Signatures

By signing below, the Parties agree to this Contract Novation Agreement as of the Effective Date.

Continuing Party: [Full Legal Name]

Authorized Signatory: [Name]

Title/Role: [Title]

Date: [Date]

Signature: ___________________________

Outgoing Party: [Full Legal Name]

Authorized Signatory: [Name]

Title/Role: [Title]

Date: [Date]

Signature: ___________________________

Incoming Party: [Full Legal Name]

Authorized Signatory: [Name]

Title/Role: [Title]

Date: [Date]

Signature: ___________________________

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Reviewed July 2026 Free download, PDF & DOCX

What is a contract novation agreement?

A Contract Novation Agreement is a document where all parties agree to replace one party to a contract with a new party. The original contract remains in effect, but responsibilities, rights, and obligations transfer to the new party, usually with a release of the outgoing party (unless otherwise stated).

How is novation different from assignment?

An assignment transfers rights (and sometimes benefits) to another party, but it may not transfer obligations unless the other party expressly assumes them. A novation replaces a party entirely and requires consent from all parties, making it the cleaner option when obligations are changing hands.

When should you use a novation agreement?

Use it during a business sale, reorganization, vendor change, outsourcing change, or when a contract needs to be continued but one party is being replaced (for example, moving a customer contract to a new entity). It is also used when a contractor’s role is transferred to another entity.

What should a novation agreement include?

It should identify the original agreement, list the outgoing party and incoming party, state the novation effective date, confirm assumption of obligations, address payments and liabilities before/after the effective date, and include release language and signatures from all parties.

Does a novation release the original party from liability?

Often yes, but it depends on the novation language. Many novations release the outgoing party from future obligations after the effective date, while keeping responsibility for past breaches. This template includes both options.

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