Novation vs. Alteration: Know the Difference
By Shumaila Saeed || Published on January 29, 2024
Novation replaces an existing obligation with a new one, altering parties or terms; alteration modifies existing terms without replacing the original agreement.
Key Differences
Novation involves substituting a new contract or obligation for an old one, with new terms or parties, effectively ending the original agreement. Alteration, in contrast, refers to changes made within the existing framework of an agreement, modifying certain terms while keeping the original contract intact.
Shumaila Saeed
Jan 29, 2024
In novation, the original contract ceases to exist and is replaced by a new one, possibly with different parties; this is a complete renewal. Alteration, however, adjusts specific details or conditions within an existing contract without creating a new contract.
Shumaila Saeed
Jan 29, 2024
The process of novation requires the consent of all original and new parties, as it introduces a new agreement. Alteration can often be done with less extensive agreement, as it only amends certain aspects of an existing contract.
Shumaila Saeed
Jan 29, 2024
A key difference is that novation requires the discharge of the old contract and the creation of a new one. Alteration, on the other hand, does not discharge the original contract but rather revises it to better suit the needs or circumstances of the parties involved.
Shumaila Saeed
Jan 29, 2024
In summary, novation is like replacing an old vehicle with a new one, while alteration is akin to modifying or upgrading the same vehicle. Both processes change the original state, but novation does so more fundamentally than alteration.
Shumaila Saeed
Jan 29, 2024
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Comparison Chart
Nature
Replacement of an old agreement with a new one
Modification of existing terms within the same agreement
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Jan 29, 2024
Parties Involved
Can involve changing the parties to the agreement
Usually does not change the parties
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Jan 29, 2024
Agreement Continuity
Original agreement is terminated
Original agreement continues with modifications
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Jan 29, 2024
Consent Requirement
Requires consent of all parties (new and old)
May require less extensive consent
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Jan 29, 2024
Fundamental Change
Represents a complete renewal or replacement
Represents a revision or update
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Jan 29, 2024
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Novation and Alteration Definitions
Novation
Novation refers to the process of substituting a new contract for an old one.
The novation of the lease agreement allowed the tenant to change the terms with the landlord’s consent.
Shumaila Saeed
Jan 05, 2024
Alteration
Alteration is the process of making changes to the terms of an existing agreement.
The alteration of the contract allowed for extended payment terms.
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Jan 05, 2024
Novation
Novation is the act of replacing an old obligation with a new one.
The contract was subject to novation when the original party transferred their responsibilities to a new party.
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Jan 05, 2024
Alteration
Alteration in legal terms means adjusting a contract’s specific provisions.
There was an alteration to the contract’s scope of work due to unforeseen circumstances.
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Jan 05, 2024
Novation
Novation involves introducing a new party to an existing contract.
Through novation, the retiring partner was replaced by a new member in the business agreement.
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Jan 05, 2024
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Alteration
Alteration involves revising or amending certain aspects of an agreement.
The alteration in the lease included a clause for early termination.
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Jan 05, 2024
Novation
Novation is creating a new legal obligation while extinguishing the old one.
To accommodate the new investor, a novation was made to the original investment agreement.
Shumaila Saeed
Jan 05, 2024
Alteration
Alteration is the act of changing certain elements without replacing the entire agreement.
The alteration of the job contract included an updated non-disclosure agreement.
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Jan 05, 2024
Novation
Novation in law signifies the delegation of a new contract, replacing the original one.
Novation occurred when the company assigned its contract to a subsidiary, changing the responsible party.
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Jan 05, 2024
Novation
The substitution of a new contract for a previous contract, or the substitution of a new party for a previous party in a contract, so that the previous obligation is considered discharged or the previous obligor released.
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Jan 05, 2024
Novation
(legal) Replacement of a contract with one or more new contracts, in particular in financial markets the replacement of a contract between a particular buyer and seller with contracts between the clearing house and each party.
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Jan 05, 2024
Novation
(legal) A new contract between the original contracting parties whereby the first obligation is extinguished and a new obligation is substituted.
An example of a novation is where an original debt which was payable in two instalments is novated to become payable in five installments.
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Jan 05, 2024
Alteration
The state of being altered; a change made in the form or nature of a thing; a changed condition.
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Jan 05, 2024
Novation
Innovation.
I shall easily grant that novations in religion are a main cause of distempers in commonwealths.
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Jan 05, 2024
Alteration
The act of altering or making different.
Alteration, though it be from worse to better, hath in it incoveniences.
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Jan 05, 2024
Novation
A substitution of a new debt for an old one; also, the remodeling of an old obligation; debt restructuring.
Shumaila Saeed
Jan 05, 2024
Alteration
The state of being altered; a change made in the form or nature of a thing; changed condition.
Ere long might perceiveStrange alteration in me.
Appius Claudius admitted to the senate the sons of those who had been slaves; by which, and succeeding alterations, that council degenerated into a most corrupt.
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Jan 05, 2024
Novation
(law) the replacement of one obligation by another by mutual agreement of both parties; usually the replacement of one of the original parties to a contract with the consent of the remaining party
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Jan 05, 2024
Alteration
An event that occurs when something passes from one state or phase to another;
The change was intended to increase sales
This storm is certainly a change for the worse
The neighborhood had undergone few modifications since his last visit years ago
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Jan 05, 2024
Alteration
The act of making something different (as e.g. the size of a garment)
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Jan 05, 2024
Alteration
The act of revising or altering (involving reconsideration and modification);
It would require a drastic revision of his opinion
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Jan 05, 2024
Alteration
Alteration refers to modifying specific details within a contract.
An alteration was made to the delivery schedule in the supply agreement.
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Jan 05, 2024
Repeatedly Asked Queries
What is novation?
Novation is the process of replacing an old obligation or contract with a new one.
Shumaila Saeed
Jan 29, 2024
What does alteration mean in a contract?
Alteration refers to making changes or modifications within an existing contract.
Shumaila Saeed
Jan 29, 2024
Is consent necessary for novation?
Yes, novation requires the consent of all original and new parties involved.
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Jan 29, 2024
Is novation common in business contracts?
Novation is less common than alteration but is used in specific circumstances, like changing parties.
Shumaila Saeed
Jan 29, 2024
Does alteration affect the identity of the contract?
No, alteration modifies certain terms but doesn’t change the contract’s fundamental identity.
Shumaila Saeed
Jan 29, 2024
Can alteration be done unilaterally?
Usually, alterations require the agreement of all parties, though this can vary based on the contract.
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Jan 29, 2024
Do alterations require a new contract?
No, alterations are made within the framework of the existing contract.
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Jan 29, 2024
What is a minor alteration in a contract?
A minor alteration involves small changes that do not significantly impact the contract's overall terms.
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Jan 29, 2024
Can novation change the parties involved in a contract?
Yes, novation can involve changing the parties to a contract.
Shumaila Saeed
Jan 29, 2024
Can a contract be novated more than once?
Yes, a contract can undergo novation multiple times, with each instance creating a new agreement.
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Jan 29, 2024
Can novation affect third-party rights?
Yes, novation can affect third-party rights, especially if they are party to the original agreement.
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Jan 29, 2024
Is novation the same as assignment?
No, assignment transfers rights under a contract, whereas novation replaces the original contract.
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Jan 29, 2024
What is the difference between amendment and alteration?
An amendment usually refers to minor changes, while alteration can involve more significant revisions.
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Jan 29, 2024
What happens to the original contract in novation?
In novation, the original contract is terminated and replaced by a new one.
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Jan 29, 2024
Are alterations legally binding?
Yes, alterations, once agreed upon, are legally binding.
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Jan 29, 2024
Do alterations need to be documented?
Yes, documenting alterations is important to avoid future disputes.
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Jan 29, 2024
Can alterations be reversed?
Reversing alterations typically requires mutual agreement of all parties, similar to making the alterations.
Shumaila Saeed
Jan 29, 2024
Can alterations change the main purpose of a contract?
Alterations typically do not change the contract's main purpose but adjust specific terms.
Shumaila Saeed
Jan 29, 2024
How does novation affect legal obligations?
Novation creates new legal obligations while extinguishing the old ones.
Shumaila Saeed
Jan 29, 2024
Is novation possible without a written agreement?
While possible, novation is usually formalized in writing for legal clarity.
Shumaila Saeed
Jan 29, 2024
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About Author
Written by
Shumaila SaeedShumaila Saeed, an expert content creator with 6 years of experience, specializes in distilling complex topics into easily digestible comparisons, shining a light on the nuances that both inform and educate readers with clarity and accuracy.
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