A Novation Agreement is actually a legal document which is used as an instrument which formalizes particular arrangement to substitute or replace one party for another party contract. This agreement is also used to transfer the rights and obligation of one party under particular contract and policy.
Do I need a Novation Agreement?
You are likely to need a Novation Agreement if you are a person who owns or who is in charge with some particular issues such as
– You are going to replace an obligation to perform a new obligation
– You are going to add particular obligation to perform
– You are going to replace an agreement of party with a new party
What does a Novation Agreement cover?
A Novation Agreement should cover the previous obligation and right of a party and point out which particular obligations that will be replaced. It is including the situation in which there is a new party replacement due to the previous agreement and contract, whether the new party should or should not be obligated to the previous agreement and/ or contract. The Novation Agreement also has to include the new obligation and policy due to the replacement of the party and/ or the previous obligation. It has to include all considerations, obligations, and right of each party.
How about the template of a Novation Agreement?
Generally a Novation Agreement is drawn based on general legal document policy. It has to begin with a clear title like the Novation Agreement and followed by a clear statement of who make this Novation Agreement and the term of the agreement written like the date of the day. This first statement of a Novation Agreement also has to clearly write who is the “transferor” and the “transferee”. And then it is followed by a clear statement of background of the Novation Agreement and the detail obligation and policy between the transferor and the the transferee. At last it is closed by the signatures of the transferor, transferee, and the the witness.
Why is it important to draw a Novation Agreement?
Replacing an agreement or a party will likely lead to a new situation where we need a new agreement as the consequence. In this case a Novation Agreement will help you protecting each party and/ company both the transferor and the transferee rights. A Novation Agreement is also used as a legal document to prove the urgency of the replacement and give both the transferee and the transferor a secure condition due to the obligation so both party and/ or company will not neglect their obligation and/ or violence other right during the contract or the cooperation.
You can download one sample of Novation agreement below you can use as your reference.