What is a novation?

• A. A mere delegation of duties.
• B. A substituted contract where a new party takes over and the original party is released.
• C. A separate contract that does not involve the original obligations.
• D. A rule that requires consideration for delegation.

Answer: (B)

Novation is the substitution of a new party for one of the original parties in a contract, with the original party released from the obligations. It creates a new agreement between the remaining party and the new party on the same terms and ends the old contract, and it requires the consent of all involved because it changes who is bound. This is why the description that mentions a substituted contract where a new party takes over and the original party is released fits novation exactly. A mere delegation of duties does not discharge the original party, so it isn’t novation; a separate contract that doesn’t involve the original obligations isn’t novation either, since novation involves replacing a party in an existing contract. The notion about a rule requiring consideration for delegation is not what novation is about; novation centers on substitution and release, not a general delegation rule.