Examples of “novation” in a Sentence

noun The replacement of a contract, or of one of the parties to it, by a new agreement that all parties consent to, so that the original obligations are extinguished.

• The lease was transferred by novation, releasing the outgoing tenant entirely.
• Novation of the supply contract required the client's written consent.

noun In finance, the process by which a clearing house steps in between the two original parties to a trade and becomes the counterparty to each of them.

• Once the trade is accepted, novation makes the clearing house the buyer to every seller.