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Novation
Novation, in contract law and business law, is the act of –
In international law, novation is the acquisition of territory by a sovereign state through "the gradual transformation of a right in territorio alieno [in foreign territory] into full sovereignty without any formal and unequivocal instrument to that effect intervening".
"Novation", as a legal term, is derived from the Roman law, in which novatio was of three kinds: substitution of a new debtor (expromissio, or delegatio), of a new creditor (cessio nominum vel actionum), or of a new contract. The term was used by Henry de Bracton, a thirteenth-century English cleric and jurist.
The 1911 Encyclopædia Britannica notes that in English law
"the term ... is scarcely naturalized, the substitution of a new debtor or creditor being generally called an assignment, and of a new contract a merger. It is doubtful, however, whether merger applies except where the substituted contract is one of a higher nature, as where a contract under seal supersedes a simple contract. Where one contract is replaced by another, it is of course necessary that the new contract should be a valid contract, founded upon sufficient consideration ... The extinction of the previous contract is sufficient consideration. The question whether there is a novation most frequently arises in the course of dealing between a customer and a new partnership, and on the assignment of the business of a life assurance company with reference to the assent of the policyholders to the transfer of their policies. The points on which novation turns are whether the new firm or company has assumed the liability of the old, and whether, the creditor has consented to accept the liability of the new debtors and discharge the old. The question is one of fact in each case. See especially the Life Assurance Companies Act 1872, s. 7, where the word "novations" occurs in the marginal note to the section, and so has quasi-statutory sanction."
Under English case law, "discussions about novation to another company" which do not reach fruition will not be taken as evidence of a novation. Consent to a novation can be implied by conduct.
Scottish law seems to be more stringent than English law in the application of the doctrine of novation, and to need stronger evidence of the creditor's consent to the transfer of liability.
In American law, the term is something of a novelty, except in Louisiana, where much of the civil law is retained.
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Novation
Novation, in contract law and business law, is the act of –
In international law, novation is the acquisition of territory by a sovereign state through "the gradual transformation of a right in territorio alieno [in foreign territory] into full sovereignty without any formal and unequivocal instrument to that effect intervening".
"Novation", as a legal term, is derived from the Roman law, in which novatio was of three kinds: substitution of a new debtor (expromissio, or delegatio), of a new creditor (cessio nominum vel actionum), or of a new contract. The term was used by Henry de Bracton, a thirteenth-century English cleric and jurist.
The 1911 Encyclopædia Britannica notes that in English law
"the term ... is scarcely naturalized, the substitution of a new debtor or creditor being generally called an assignment, and of a new contract a merger. It is doubtful, however, whether merger applies except where the substituted contract is one of a higher nature, as where a contract under seal supersedes a simple contract. Where one contract is replaced by another, it is of course necessary that the new contract should be a valid contract, founded upon sufficient consideration ... The extinction of the previous contract is sufficient consideration. The question whether there is a novation most frequently arises in the course of dealing between a customer and a new partnership, and on the assignment of the business of a life assurance company with reference to the assent of the policyholders to the transfer of their policies. The points on which novation turns are whether the new firm or company has assumed the liability of the old, and whether, the creditor has consented to accept the liability of the new debtors and discharge the old. The question is one of fact in each case. See especially the Life Assurance Companies Act 1872, s. 7, where the word "novations" occurs in the marginal note to the section, and so has quasi-statutory sanction."
Under English case law, "discussions about novation to another company" which do not reach fruition will not be taken as evidence of a novation. Consent to a novation can be implied by conduct.
Scottish law seems to be more stringent than English law in the application of the doctrine of novation, and to need stronger evidence of the creditor's consent to the transfer of liability.
In American law, the term is something of a novelty, except in Louisiana, where much of the civil law is retained.
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