Novation in United States

Novation Definition

The substitution of a new obligation for an old, which is thereby extinguished. 57 Wis. 534. The term Is of civil law origin, and is rarely used in the common law. Novation is of three sorts:
(1) Where the debtor and creditor remain the same, but a new debt takes the place of the old one. Here, either the subject matter of the debt may be changed, or the conditions of time, place, etc., of payment.
(2) Where the debt remains the same, but a new debtor is substituted for the old. This novation may be made without the inNOVEL ASSIGNMENT tervention or privity of the old debtor (in this case the new agreement is called expromissio, and the new debtor ex’promissor) , or by the debtor’s transmission of his debt to another, who accepts the obligation, and is himself accepted by the creditor. This transaction is called delegatio. Domat lays down the essential distinction between a delegation and any other novation, thus: That the former demands the consent of all three parties, but the latter that only of the two parties to the new debt.
(3) Where the debt remains the same, but a new creditor is substituted for the old. This also is called delegatio, for the reason adduced above, to wit, that all three parties must assent to the new bargain. It differs from the cessio nominis of the civil law by completely cancelling the old debt, while the cessio nominis leaves the creditor a claim for any balance due after assignment. See Civ. Code Cal. §§ 1530, 1532. To constitute a novation there must be (1) a valid pre-existing obligation ; (2) consent of capable parties; (3) express intention to innovate. The release of the old obligation is a sufficient consideration. 37 Ohio St, 279.

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Legal Issue for Attorneys

The substitution of a new obligation for an old, which is thereby extinguished. 57 Wis. 534. The term Is of civil law origin, and is rarely used in the common law. Novation is of three sorts:
(1) Where the debtor and creditor remain the same, but a new debt takes the place of the old one. Here, either the subject matter of the debt may be changed, or the conditions of time, place, etc., of payment.
(2) Where the debt remains the same, but a new debtor is substituted for the old. This novation may be made without the inNOVEL ASSIGNMENT tervention or privity of the old debtor (in this case the new agreement is called expromissio, and the new debtor ex’promissor) , or by the debtor’s transmission of his debt to another, who accepts the obligation, and is himself accepted by the creditor. This transaction is called delegatio. Domat lays down the essential distinction between a delegation and any other novation, thus: That the former demands the consent of all three parties, but the latter that only of the two parties to the new debt.
(3) Where the debt remains the same, but a new creditor is substituted for the old. This also is called delegatio, for the reason adduced above, to wit, that all three parties must assent to the new bargain. It differs from the cessio nominis of the civil law by completely cancelling the old debt, while the cessio nominis leaves the creditor a claim for any balance due after assignment. See Civ. Code Cal. §§ 1530, 1532. To constitute a novation there must be (1) a valid pre-existing obligation ; (2) consent of capable parties; (3) express intention to innovate. The release of the old obligation is a sufficient consideration. 37 Ohio St, 279.

This definition of Novation is based on The Cyclopedic Law Dictionary. This entry needs to be proofread.