Deed of novation of contract

by Practical Law Commercial

A short deed of novation to transfer all of one party’s rights and obligations under an existing contract to a third party. It is designed for use when the parties wish to novate the contract under a deed to avoid the possibility of consideration issues arising. The drafting notes explain what novation is, when a novation agreement might be used to transfer a contract, the key legal requirements for consent and consideration, and the implications of novation for pre-existing liabilities. The deed provides for the outgoing party to surrender its rights and be released from its obligations under the original agreement in return for the incoming party assuming rights and obligations that duplicate those of the outgoing party. It also provides drafting to deal with pre-novation liabilities, with an option to include indemnities (commonly but not automatically included in novation agreements).