Direct answer
What does novation mean?
A novation is a new agreement that substitutes a new party or obligation and releases the replaced party or obligation.
Exam cue: Look for consent and a clear release, not merely a transfer of duties.
What does it look like in a question?
Example
A landlord agrees to replace the original tenant with a new tenant and release the original tenant.
Common exam trap
What should you not confuse it with?
Assignment alone does not automatically create a novation.
Related contracts and leases terms
AssignmentAn assignment is a transfer of a party's contractual rights or leasehold interest to another person, subject to the agreement and law.ConsiderationConsideration is something of legal value exchanged as part of a contract.ContingencyA contingency is a contract condition that must be satisfied or waived for a stated obligation to become final or continue.CounterofferA counteroffer is a response that rejects an offer and proposes different terms.Executed contractAn executed contract is a contract in which the parties have completed the promised performance.Executory contractAn executory contract is a contract under which one or more material obligations remain to be performed.
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Put the term back into its full subject.
A definition helps with recall. The subject guide shows how the rule interacts with documents, scenarios, calculations and practice questions.