novation

novation
(1) The substitution of an existing debt with a newer debt.
(2) An agreement to substitute an existing party to a contract with a new party. All of the original parties to the contract must agree to the substitution. American Banker Glossary
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defeasance whereby the firm's debt is cancelled. Bloomberg Financial Dictionary
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The legal word that describes the conversion of a derivative contract from being one simple bilateral contract between the original buyer and seller in the market into two contracts in which the clearing house becomes principal to each, i.e. after novation, the clearing house is the counterparty ( seller) to the buyer and separately the counterparty ( buyer) to the seller. Dresdner Kleinwort Wasserstein financial glossary
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Satisfaction and discharge of existing contractual obligations by means of their replacement by new obligations (whose effect, for example, is to replace gross with net payment obligations). The parties to the new obligations may be the same as those to the existing obligations or, in the context of some clearing house arrangements, there may additionally be substitution of parties. Euroclear Clearing and Settlement glossary

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novation no‧va‧tion [nəʊˈveɪʆn ǁ noʊ-] noun [countable, uncountable] LAW
when there is a change of one or more of the people or organizations that have agreed to a contract, with the permission of the other people or organizations involved:

• The suit is based on the contract-law principle of novation: duties and obligations of a contract can't be transferred without the consent of both parties.

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novation UK US /nəʊˈveɪʃən/ noun [C or U]
► LAW a situation in which all the parties to a contract (= everyone involved in it) agree that a person named in the contract can be changed for another person, or agree to changes in its conditions: »

The most important fact to note is that novation requires the consent or acceptance of all parties to the relevant contract.


Financial and business terms. 2012.

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Look at other dictionaries:

  • novation — no·va·tion /nō vā shən/ n [Late Latin novatio renewal, legal novation, from Latin novare to make new, from novus new]: the substitution by mutual agreement of one obligation for another with or without a change of parties and with the intent to… …   Law dictionary

  • novation — [ nɔvasjɔ̃ ] n. f. • 1307; bas lat. novatio, de novare « renouveler », rad. novus 1 ♦ Substitution d une obligation ancienne, soit par changement de créancier, de débiteur, soit par changement d objet ou de cause. 2 ♦ (1548, repris XXe) Rare… …   Encyclopédie Universelle

  • Novation — (von lat. novatio, Genitiv –onis) bedeutet (Er )Neuerung→Neuerungsvertrag Im österreichischen und deutschen Schuldrecht versteht man darunter eine Schuldersetzung in inhaltlicher Hinsicht, durch die die Parteien entweder eine Änderung des… …   Deutsch Wikipedia

  • Novation — No*va tion, n. [L. novatio; novus new: cf. F. novation.] 1. Innovation. [Obs.] [1913 Webster] I shall easily grant that novations in religion are a main cause of distempers in commonwealths. Laud. [1913 Webster] 2. (Law) A substitution of a new… …   The Collaborative International Dictionary of English

  • Novation — (v. lat.), jedes Rechtsgeschäft, wodurch eine bisherige Verpflichtung aufgehoben u. an deren Stelle eine neue gesetzt wird. Dies geschieht entweder so, daß der bisherige Schuldner u. Gläubiger unverändert bleiben (Novatio simplex); od. so, daß an …   Pierer's Universal-Lexikon

  • Novation — (lat., Neuerung, Umwandlung), im juristischen Sinne die Aufhebung einer bestehenden Verbindlichkeit durch Begründung einer neuen, die an die Stelle der bisherigen tritt. Es kommen z. B. Gläubiger und Schuldner dahin überein, aus einer… …   Meyers Großes Konversations-Lexikon

  • Novation — Novatiōn (lat.), Neuerung, Tilgung einer Rechtsverbindlichkeit dadurch, daß eine neue an ihre Stelle tritt …   Kleines Konversations-Lexikon

  • Novation — Novation, lat. deutsch, Abänderung eines alten Rechtsgeschäftes durch ein neues, das an dessen Stelle tritt u. jenes aufhebt. Also wenn für den bisherigen Schuldner ein anderer eintritt u. der Gläubiger den letztern mit Entlassung des erstern… …   Herders Conversations-Lexikon

  • novation — (n.) replacement of an old obligation by a new one, 1530s, from L. novationem (nom. novatio) a making new, renewal, noun of action from pp. stem of novare make new, from novus new (see NEW (Cf. new)) …   Etymology dictionary

  • novation — [nō vā′shən] n. [LL novatio < L novare, to make new < novus, NEW] Law the substitution of a new obligation or contract for an old one by the mutual agreement of all parties concerned …   English World dictionary

  • Novation — This article is about the legal term. For the keyboard manufacturer, see Novation Digital Music Systems. For the former modem manufacturer, see Novation CAT. For the Fringe television episode, see Novation (Fringe) …   Wikipedia

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