Contracts
Novation
Definition
A novation is the substitution of a new contract for an existing one, either by replacing a party or by replacing the obligations under the agreement. Unlike an accord and satisfaction, a novation immediately extinguishes the prior obligation. All parties must consent to the novation for it to be effective. The key distinction from assignment or delegation is that in a novation, the original obligor is completely released from liability.
Example
Tenant A assigns the lease to Tenant B with the landlord's consent. If the landlord agrees to release Tenant A entirely and look only to Tenant B, a novation has occurred.