Estate Planning and Business Law

Novation

Novation

A novation is the substitution of a new obligation for an existing one [Civ. Code § 1530]. It requires an intent to discharge the old contract, mutual assent, and consideration. A novation is subject to the general rules governing contracts [Civ. Code § 1532].

A novation is made by one of the following methods [Civ. Code § 1531]:

  • The substitution of a new obligation between the parties, with intent to extinguish the old obligation.
  • The substitution of a new debtor in place of the old one, with the intent to release the latter. Acceptance of payments from a new debtor does not amount to a contract to release the original debtor.
  • The substitution of a new creditor in place of the old one, with intent to transfer the rights of the latter to the former.

Blackwell, Santaella & Jahangiri, LLP specializes in business and corporate law, business, commercial and real estate litigation, estate planning and bankruptcy law. We are located in San Ramon, Contra Costa County. We are open from 8:30 a.m. to 5 p.m., Monday to Friday. To make an appointment please call 925-359-3233.

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