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Simple English definitions for legal terms
objective novation
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A quick definition of objective novation:
Novation is when you replace an old obligation with a new one. This can happen in three ways: by creating a new obligation between the same parties, by replacing the debtor, or by replacing the creditor. Novation discharges the old obligation and creates a new one. It requires the consent of all parties involved. Objective novation is when a new obligation replaces an old one, while subjective novation is when a new obligor replaces a previous one who has been discharged.
A more thorough explanation:
Objective novation is a legal term that refers to the substitution of a new obligation for an old one. This can happen in a few different ways:
- Replacing an existing obligation with a new one
- Replacing an original party with a new party
- Creating a new obligation between the same parties
For example, let's say that Person A owes Person B $100. Person C also owes Person B $100. If Person B agrees to accept Person C as a debtor in place of Person A, and if Person C agrees to accept Person B as their creditor in place of Person A, this would be an example of objective novation. The old obligation between Person A and Person B is replaced with a new obligation between Person B and Person C.
Another example of objective novation might be if a company takes over another company and assumes their debts and obligations. The old obligations are replaced with new ones under the new ownership.
Overall, objective novation is a way to transfer obligations from one party to another, with the consent of all parties involved.