An agreement that transfers one party's rights and obligations under an existing contract to a new third party, releasing the original party from its obligations.
NOVATION AGREEMENT
This Novation Agreement ("Agreement") is entered into on [DATE] among:
ORIGINAL PARTY: [ORIGINAL PARTY FULL NAME / COMPANY NAME] ("Transferor")
CONTINUING PARTY: [CONTINUING PARTY FULL NAME / COMPANY NAME] ("Continuing Party")
NEW PARTY: [NEW PARTY FULL NAME / COMPANY NAME] ("Transferee")
RECITALS
WHEREAS, Transferor and Continuing Party are parties to that certain [ORIGINAL CONTRACT NAME] dated [ORIGINAL CONTRACT DATE] (the "Original Contract");
WHEREAS, Transferor desires to transfer all of its rights, obligations, and liabilities under the Original Contract to Transferee; and
WHEREAS, all parties consent to this novation on the terms set forth herein;
NOW, THEREFORE, the parties agree as follows:
1. NOVATION
With effect from [EFFECTIVE DATE] (the "Effective Date"), Transferee is substituted for Transferor as a party to the Original Contract and assumes all of Transferor's rights, obligations, and liabilities under the Original Contract.
2. RELEASE OF TRANSFEROR
With effect from the Effective Date, Continuing Party releases and discharges Transferor from all obligations, liabilities, and claims arising under the Original Contract, whether accrued before or after the Effective Date.
3. TRANSFEREE'S ACCEPTANCE
Transferee accepts and assumes all obligations of Transferor under the Original Contract and agrees to be bound by all terms and conditions of the Original Contract from the Effective Date.
4. CONTINUING PARTY'S CONSENT
Continuing Party consents to this novation and agrees that all future obligations under the Original Contract shall be owed to and from Transferee in place of Transferor.
5. ORIGINAL CONTRACT TERMS
Except as expressly modified by this Agreement, all terms and conditions of the Original Contract remain in full force and effect.
6. REPRESENTATIONS
Each party represents that it has the authority to enter into this Agreement and that there are no outstanding claims, disputes, or breaches under the Original Contract as of the Effective Date.
7. GOVERNING LAW
This Agreement is governed by the laws of [STATE/JURISDICTION].
TRANSFEROR: _________________
[TRANSFEROR NAME]
Date: ___________
CONTINUING PARTY: _________________
[CONTINUING PARTY NAME]
Date: ___________
TRANSFEREE: _________________
[TRANSFEREE NAME]
Date: ___________
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A Novation Agreement template transfers one party's contractual rights and obligations to a new third party, effectively replacing the original party in the contract with a new one. Unlike an assignment (which transfers rights only), a novation transfers both rights and obligations and requires consent from all three parties — the transferor, the new party, and the continuing party. This free novation agreement template is used in business acquisitions, outsourcing arrangements, debt restructuring, and contract transfers when a business changes ownership or when a contractor is replaced mid-project. A novation agreement formally releases the original party from all future obligations under the contract.
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Absolutely. All placeholder fields (marked with brackets) can be replaced with your specific details. We recommend reviewing the final version with a legal professional for high-stakes agreements.
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