In contract and business law, innovation is the act of either: replacing an obligation of execution with a new obligation; or replace a party to an agreement with a new party. Unlike an assignment valid as long as the obligation is terminated, an innovation applies only with the agreement of all parties to the original contract: the obligated must consent to the replacement of the original debtor by the new debtor. A contract transferred through the novation procedure transfers all obligations and obligations from the original debtor to the new debtor. For example, if there`s a contract where Dan goes to give Alex a TV and another contract where Alex goes to give Becky a TV, then it`s possible to renew both contracts and replace them with a single contract where Dan agrees to give Becky a television. Unlike the assignment, the Novation must be approved by all parties. The new contract has yet to be considered, but it is generally assumed that the previous contract will be executed. Another classic example is that Company A enters into a contract with Company B and an innovation is included to ensure that when Company B sells, merges or transfers the core of its business to another entity, the new entity will assume The obligations and commitments of Company B with Company A under the contract. Therefore, under the contract, an acquirer, merger partner or acquirer of Company B follows in the footsteps of Company B with respect to its obligations to Company A. Alternatively, in the event of such a change, an “innovation contract” may be signed under the original contract. Etymology: [L. novatio; novus new: cf. F.
novation.] n. replacing a new commitment to existing innovation. (law) the replacement of one obligation by another by a mutual agreement between the two parties; As a general rule, the replacement of one of the original parts of a contract with the agreement of the remaining party (law) replacing a new debt with an old one; overhauling an old bond; Debt restructuring. Replacing a contract with one or more new contracts, especially in the financial markets, replacing a contract between a buyer and a seller determined by contracts between the clearing house and each party. A new contract between the original parties, which terminated the first obligation and replaces a new commitment. Etymology: novatio < novus. Compare the novelty, the novelty . .