About this novation agreement
Use this novation agreement to transfer the right to receive a debt repayment from one creditor to another (i.e. change who will receive the debt repayments). Common uses are when a business is sold and the purchaser takes on the assets of the seller, or when buying the debts of another party.
This is a simple yet comprehensive agreement that can be used to novate any right to receive a debt, usually with only minimal editing.
The basic law is that A cannot transfer to C the obligations he has under a contract with B, without B agreeing. So what happens is that all three enter into a “novation” agreement whereby the proposed transfer is made with B’s permission. Usually, B will want payment or some concession for his agreement.
The consent of all three parties - the transferee, the transferor and the other contracting party - is required to effect any novation. Unless you specifically require the consent of the other contracting party (perhaps because your contract has a non-assignment clause), our assignment agreement may be an even simpler way of transferring your contract to someone else.
Why not a deed of novation?
We have a longer article titled Deeds: clearing the confusion on what a deed is, when to use one and why that explains why a deed of novation is unlikely to be required in practice.
To summarise the article, the deed format is used where one party to a contract receives no consideration. However, a novation is invariably "for value", and as such, a deed of novation confers little additional advantage.
In the unlikely event that a party agrees to novation out of pure kindness, the consideration can be entered as “one pound”, or a "peppercorn". The sum does not need to have any relation to the value of the debt being novated.
When to use this novation agreement
A common misconception is that novating a debt cancels an old debt and creates a new one to the new owner. Instead, novation just changes the parties to the original contract.
In most cases, novation is an easier option than cancelling and drawing new agreements.
This document can be used to transfer any debt between a creditor and a new party provided that the debtor agrees to the transfer.
Changing who will repay the debt
If you want to transfer the debt to another debtor (i.e. change who will repay the debt), then the following agreement will be more suitable:
Novation agreement: transfer debt to new debtor
Agreement features and contents
- Suitable when either party is resident outside the UK;
- Ensures a legal transfer as it is drawn as an agreement between all parties;
- Comprehensive provisions provide ideas for you to mould
The agreement contains the following sections:
- Details of the parties;
- Indemnity to protect both parties from loss, damage or legal liability once the debt is transferred;
- The novation;
- Existing claims: sets out how outstanding claims will be dealt with;
- Costs: identifies who will bear costs incurred to date;
- Other usual legal provisions in plain English.
Reasons to buy from Net Lawman
Full money back guarantee – buy with confidence
Our novation agreement comes with a no questions asked full money back guarantee. You take no risk that it might not be right. Once you buy it, we’ll give you 30 days to evaluate it in any way you want. If for any reason you’re not happy, just e-mail us and we’ll refund your money in full immediately.
Guidance notes included - prior legal knowledge is not required
Comprehensive guidance notes, written by the author of the document, are included. These notes ensure that you don’t need to be a lawyer or have knowledge of the law to understand which paragraphs you should edit to complete the agreement.
Minimal editing required
Like all Net Lawman documents, this agreement has been written specifically in such a way that you don’t need to spend hours editing it. It uses an approach where you remove the sections that aren’t applicable to you, so you don’t have to add any back, write your own, or worry about whether you are using correct legal language.
Paragraphs have been written to stand alone from each other. Removing one that isn’t applicable to your circumstances doesn’t affect the standing of any other in the agreement.
Plain language minimises future disagreements
Your agreement is real law written in plain language that all parties will understand. This will minimise the likelihood of later disputes.
If a dispute does arise and you find yourself in court, the judge will look more favourably on a legal agreement written in plain language over one peppered with complicated legal jargon. Your case will be stronger if it is clear that both sides understood the agreement when it was signed.
Buy once – re-use again and again
You can use the document as many times as you like – just create a new copy from the master template.
Delivered straight to your inbox
As soon as you complete the secure checkout process, we will send your document straight to your inbox. We will also keep a copy for you for 60 days in our customer area so you can access it even when you are away from your e-mail.
Still unsure whether this is the right document for you?
If you are unsure whether this novation agreement is suitable for your particular circumstances, then you have two options. The first is to buy now, evaluate the document, and use the 30 day, full money back guarantee to obtain a refund if it isn’t suitable. You take no risk in seeing the agreement. The second option is to contact us and ask. We can’t offer you legal advice on your situation, but we can help you find the document you want. We aim to respond to your question within 24 hours. |
