====== Novation ======

A **novation** is the **substitution of a new contract or party** for an existing one, with the **intent to extinguish the original obligation**.

===== Key Characteristics =====
  * Replaces an **existing contract**
  * Requires **mutual agreement** of all parties
  * Discharges the **original obligation**
  * Creates a **new, enforceable contract**

===== Types of Novation =====
  * **New Party Novation**
    * A new party replaces one of the original parties
    * Example: buyer assumes seller’s contract and seller is released

  * **New Contract Novation**
    * Original parties remain, but the contract terms are replaced

===== Novation vs Assignment =====
  * **Novation**
    * Original party is **released from liability**
    * Requires consent of all parties

  * **Assignment**
    * Original party remains **liable**
    * Transfers rights, not obligations

===== Real Estate Example =====
  * Seller is released from a loan when lender approves a new buyer as the obligor

===== Exam Tip =====
  * Without clear intent, a transfer is presumed to be an **[[assignment]]**, not a novation