Novation
is a term used in contract law and business law to
describe the act of either replacing an obligation to
perform with a new obligation, or replacing a party to an
agreement with a new party. A novation must be agreed
upon by all original parties to the original agreement.
Novation is also used in futures/options trading markets
to describe a special situation where the clearing house
takes all positions with all the brokers, buying all the
brokers sell, and selling all that the brokers buy.
In business, novation is typically the process by which a
newly formed corporation assumes the pre-incorporation
liabilities incurred by its founders. |
