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Novation Agreement
Transfer contractual rights and obligations to a new party with this Novation Agreement Template.
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Novation Agreement Template
This Novation Agreement (“Agreement”) is entered into on [Date], by and between:
Original Party A (Continuing Party): [Full Legal Name / Company Name]
Address: [Address]
Contact: [Phone, Email]
Original Party B (Outgoing Party): [Full Legal Name / Company Name]
Address: [Address]
Contact: [Phone, Email]
New Party (Incoming Party): [Full Legal Name / Company Name]
Address: [Address]
Contact: [Phone, Email]
Together referred to as the “Parties.”
1. Background
The Parties entered into a contract dated [Original Contract Date] (“Original Agreement”). The Parties now wish to substitute the New Party in place of the Outgoing Party, with the consent of all Parties.
2. Novation and Release
The Outgoing Party is released from all obligations, liabilities, and claims under the Original Agreement as of the Effective Date.
The New Party assumes all rights, obligations, and liabilities of the Outgoing Party under the Original Agreement.
The Continuing Party consents to the substitution of the New Party in place of the Outgoing Party.
3. Effective Date
This Agreement shall take effect on [Effective Date].
4. Representations and Warranties
Each Party represents and warrants that:
They have the authority to enter into this Agreement.
Consent is given voluntarily and without coercion.
No other agreements conflict with this novation.
5. Governing Law
This Agreement shall be governed by and construed in accordance with the laws of [State/Country].
6. Entire Agreement
This Agreement constitutes the entire understanding between the Parties with respect to the novation of the Original Agreement and supersedes all prior negotiations or representations.
Signatures
Original Party A (Continuing Party): __________________ Date: ________
Name/Title: [Full Name, Title]
Original Party B (Outgoing Party): __________________ Date: ________
Name/Title: [Full Name, Title]
New Party (Incoming Party): ________________________ Date: ________
Name/Title: [Full Name, Title]
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Novation Agreement
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For quick answers, scroll below to see the FAQ.
Click below for detailed info on the template.
For quick answers, scroll below to see the FAQ.
NOVATION AGREEMENT FAQ
What is a Novation Agreement?
A Novation Agreement is a legal contract that substitutes one party in an existing contract with a new party, transferring both rights and obligations. Unlike assignment, novation requires the consent of all original parties because it completely replaces one party.
Why is a Novation Agreement important?
It ensures a smooth transition of responsibilities and liabilities, prevents disputes, and maintains the enforceability of the original contract under new party arrangements. It is often used in mergers, acquisitions, financing, or restructuring.
When should you use a Novation Agreement?
Use it when you need to replace a party in an existing agreement—for example, when a supplier sells its business, when contracts are transferred during a merger, or when debt obligations are moved to another entity.
What should a Novation Agreement include?
It should clearly identify the original contract, the outgoing party, the incoming party, the continuing party, the effective date of novation, and mutual consent to the transfer of obligations.
How does novation differ from assignment?
An assignment transfers only benefits (rights) under a contract, while novation transfers both benefits and obligations, effectively creating a new contract with the new party fully stepping into the old party’s role.
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