Contracts & ExecutionQuestion 838 of 1605
A 'novation' occurs when:
a.The parties add a new completion date only
b.A contract is simply photocopied
c.A new party is substituted for an original party, with all parties agreeing to release the original and create a new contract
d.A party unilaterally raises the price
Explanation
A novation is the substitution of a new party or a new obligation for an existing one, with the consent of all parties, which extinguishes the old contract and replaces it with a new one, thereby releasing the original obligor. It is more than a simple assignment or delegation because it discharges the original party's liability. Copying a document, unilateral price changes, or merely adding a date are not novations; all parties must agree to the substitution and release.
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Reviewed by Abraham Chen — Licensed California General Contractor (CSLB License #1101856 — verify)