What is a novation?
A contract principle by which a third person takes over the rights and duties of a party to a contract, such party thereby being released from obligations under the contract. In the law of corporations, the concept may be applied to the release of a promoter who is personally liable on a pre-incorporation contract when the corporation is formed and adopts the contract. A novation requires the consent of the other party to the contract, but that consent may be implied from the circumstances.
