Novation agreement

This novation agreement template may be used to transfer the rights and obligations of one party under a contract to another person or organisation.

Novations are a common aspect of the sale and purchase of a business.

Under this template, the transfer of rights and obligations takes effect from a specified date, which date must be at some point after the coming into force of the original contract.

If you are looking to transfer the contract "ab initio" (i.e. to create a legal fiction that the transferee was the original contracting party, not the transferor) you should consider our ab initio novation contract precedent instead.

A copy of this novation agreement is included with the premium version of our business pack.

AGREEMENT

1. Definitions
2. Novation
3. Indemnity
4. Third party rights
5. Counterparts
6. Law and jurisdiction

ATTACHMENT 1 (COPY OF TRANSFERRING CONTRACT)

How do the transfer clauses in the document work?

In summary: (i) the transferee steps into the shoes of the transferor from the agreed date; and (ii) the counterparty accepts the transfer, releasing the transferor from liabilities arising thereafter. The transfer does not affect liabilities owed by the transferor to the counterparty or vice versa arising under the contract before the novation date.

What does the "indemnity" clause included in this template do?

The indemnity, which is entirely optional, protects the transferee against any losses suffered as a result of a breach of contract by the transferor.

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A copy of this novation agreement is included in the following pack:

• Business pack (only the premium version of the pack)