novation

noun

no·​va·​tion nō-ˈvā-shən 

: the substitution of a new legal obligation for an old one

Examples of novation in a Sentence

Recent Examples on the Web

The contract novation will be subject to the consent of FSA. —Adam S. Minsky, Forbes, 28 Sep. 2021

That new student loan servicer — which collects student loan payments and manages customer service for student loans — may be a company called Maximus, with whom Navient signed a novation agreement to transfer servicing. —Zack Friedman, Forbes, 29 Sep. 2021

Under the rules in six large EU member states analysed by the International Swaps and Derivatives Association (ISDA), a global trade body, novations and compressions would be considered regulated activities. —The Economist, 12 Oct. 2017

Word History

Etymology

borrowed from Latin novātiōn-, novātiō, from novāre "to make new, renew, replace an existing legal obligation with a new one" (derivative of novus "new") + -tiōn-, -tiō, suffix of verbal action — more at new entry 1

First Known Use

1682, in the meaning defined above

Legal Definition

novation

noun

no·​va·​tion nō-ˈvā-shən 

: the substitution by mutual agreement of one obligation for another with or without a change of parties and with the intent to extinguish the old obligation

no evidence that the contract was assigned, or that there was a novation

—Boccardi v. Horn Constr. Corp., 612 N.Y.S.2d 180 (1994)

compare accord sense 3, substituted contract at contract

Etymology

Late Latin novatio renewal, legal novation, from Latin novare to make new, from novus new