NOVATION

novation

(noun) (law) the replacement of one obligation by another by mutual agreement of both parties; usually the replacement of one of the original parties to a contract with the consent of the remaining party

Source: WordNet® 3.1

Etymology

Noun

novation (countable and uncountable, plural novations)

(legal) Replacement of a contract with one or more new contracts, in particular in financial markets the replacement of a contract between a particular buyer and seller with contracts between the clearing house and each party.

(legal) A new contract between the original contracting parties whereby the first obligation is extinguished and a new obligation is substituted.

Source: Wiktionary

No*va"tion, n. Etym: [L. novatio; novus new: cf. F. novation.]

1. Innovation. [Obs.] I shall easily grant that novations in religion are a main cause of distempers in commonwealths. Laud.

2. (Law)

Definition: A substitution of a new debt for an old one; also, the remodeling of an old obligation.

Source: Webster’s Unabridged Dictionary 1913 Edition