Novation means what?

Novation means what?

• A. A change in the original terms, such as extending time for closing or loan commitment; all other terms remain the same.
• B. A temporary suspension of obligations.
• C. A new party with new duties; old duties remain.
• D. The cancellation of a contract due to breach.

Answer: (A)

Novation in this context means altering the contract’s performance terms while keeping the core agreement in force. For example, you might extend the closing date or adjust a loan commitment, and everything else in the contract stays the same. The idea is to modify how or when the duties are performed without changing who is obligated or creating a completely new contract. This differs from a temporary suspension, which would pause obligations rather than adjust the terms. It also differs from bringing in a new party with new duties while leaving the old duties intact, which would effectively create a different arrangement. And it’s not about canceling the contract due to breach, which ends the agreement.

Novation in this context means altering the contract’s performance terms while keeping the core agreement in force. For example, you might extend the closing date or adjust a loan commitment, and everything else in the contract stays the same. The idea is to modify how or when the duties are performed without changing who is obligated or creating a completely new contract.

This differs from a temporary suspension, which would pause obligations rather than adjust the terms. It also differs from bringing in a new party with new duties while leaving the old duties intact, which would effectively create a different arrangement. And it’s not about canceling the contract due to breach, which ends the agreement.