About this novation agreement
Use this novation agreement to transfer a debt obligation from one party to another (i.e. change who will repay the debt). Common uses are when a business is sold and the purchaser takes on the liabilities of the seller, or when restructuring debt (a third party buys the obligation to repay a loan and interest).
A common misconception is that a novation of a debt is a cancellation of old debt in exchange for issuance of new. Instead, novation just changes the parties to the original contract and doesn’t create a new contract. In most cases, novation is an easier option than cancelling and drawing new agreements.
This is a simple yet comprehensive agreement that can be used to novate any debt, usually with only minimal editing.
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
This document can be used to transfer any loan or debt to an individual or company provided that the creditor agrees to the transfer.
You should use this novation agreement, rather than an assignment agreement if all parties to the contract will agree to the change and sign the contract. Its usually easier just to get the transferring parties to sign an assignment agreement, but some contracts have non-assignment clauses that mean that novation is the only valid way of transferring the contract to someone else. If in doubt, use this agreement and obtain consent from all involved.
Changing who will receive the debt repayments
If you want to transfer the debt to another creditor (i.e. change who will receive the repayments), then the following novation agreement will be more suitable:
Novation agreement: transfer debt to new creditor
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;
- Indemintity to protect both parties from loss, damage or legal liability once the contract is transferred;
- The novation;
- Existing claims: sets out how outstanding claims against the transferor 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 novation contract 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 document 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. |
