Novation

The video tutorial explains how two parties in a contract can involve a third party by assigning rights or delegating responsibilities. It introduces the concept of novation, where a new agreement replaces the old one, potentially involving new parties and releasing the original party from obligations. The process of novation renews obligations under a pre-existing agreement with a new one.

What is the primary reason for involving a third party in a contract?

• To increase the contract's value

• To assign rights or delegate responsibilities

• To terminate the contract

• To reduce the number of parties involved

What happens when duties are delegated to a third party?

• The original agreement is automatically voided

• The original party remains fully liable

• A new agreement can replace the old one, releasing the original party

• The third party takes over all responsibilities without any new agreement

Which of the following best describes a novation?

• A renewal of obligations with new parties involved

• A simple transfer of rights

• A cancellation of the original agreement

• An informal agreement between parties

In a novation, what typically happens to the original agreement?

• It is terminated without replacement

• It is partially modified

• It is replaced by a new agreement

• It remains unchanged

What is a key feature of a novation compared to simple delegation?

• It brings in one or more new parties

• It involves only the original parties

• It is a temporary arrangement

• It does not require a new agreement