Which scenario would create an implied novation after delegation?

• A. The delegator repudiates liability to the other party and that party accepts performance from the delegatee without reserving rights against the delegator.
• B. The delegator remains liable to the other party despite delegation.
• C. The delegatee refuses to perform the contract.
• D. A novation can only occur by an express agreement.

Answer: (A)

The key idea is that a novation can arise by implication when the original debtor is discharged and the other party accepts performance from the substitute. A novation means substituting a new party for the original obligor and releasing the original obligor from liability, creating a new contract between the obligee and the substitute.

In this scenario, the delegator repudiates liability to the other party, and the other party accepts performance from the delegatee without reserving rights against the delegator. That combination shows the obligee’s intent to release the delegator and to treat the delegatee as the new promisor, effectively forming a new contract and discharging the old one. This is an implied novation.

If the delegator remains liable despite delegation, there is no release and no substitution of obligations. If the delegatee refuses to perform, there’s no substitution or discharge of the original contract. While novation can be express, it can also occur by implication through conduct, so limiting novation to only express agreements is incorrect.