Novation

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Law.

1.

A method of loan transfer, which transfers the rights and obligations of a lender by creating in law a new ('nova') contract between the parties, on the same terms as the original agreement except that the transferee has taken the place of the transferor.


2.

More generally, the legal process of creating a new contract, with the commercial effect of transferring legal rights and obligations. Another example is the novation of trading contracts through a central counterparty.


See also