Novation: Difference between revisions

Novation (view source)

Revision as of 12:19, 9 October 2020

180 bytes added , 9 October 2020

no edit summary

Amwelladmin

Bureaucrats, Interface administrators, Administrators

82,891

edits

@@ Line 1: / Line 1: @@
-{{g}}An layperson’s terms a [[novation]] is the transfer in full of one party’s rights and obligations under a {{t|contract}} to another person. The other party to the original contract stays put.
+{{g}}In layperson’s terms a [[novation]] is the transfer in full of one party’s rights and obligations under a {{t|contract}} to another person. The '''transferor''' steps out of the contract and is no longer bound by it. The '''transferee''' steps in to the contract and assumes all the transferor’s obligations. The '''remaining party''' stays put, but must perform to, and may expect performance from, the transferee and not the transferor.
+===Bizarre love triangle===
-Unlike an [[assignment]], a [[novation]] requires the agreement of all three parties (the exiting party, the incoming party and the party staying put). A party to an [[English law]] {{t|contract}} may “[[assign]]” its ''[[right]]s'' to a third person without its counterparty’s permission (as long as the contract does not forbid it); however, it cannot unilaterally assign its '''[[obligation|obligations]]''' under [[English law]].
+Unlike an [[assignment]], a [[novation]] requires all three parties to agree. A party to an [[English law]] {{t|contract}} may “[[assign]]” its ''[[right]]s'' to a third person without its counterparty’s permission (as long as the contract does not forbid it); however, it cannot unilaterally assign its '''[[obligation|obligations]]'''.
 There are pretty obvious economic reasons why that should be so: the creditworthiness of the party with whom you have contracted is a fundamental part of the bargain you have made: that party should not be able to substitute itself without your permission.