The term novation means the agreement between two parties that leads to the substitution or introduction of a new contract in place of an old one. The new contract or agreement cancels the old one.
Novation is more commonly used in scenarios where the parties involved come to a conclusion that services or payment can’t be made under the original contract.
Novation is also used when the debtor is forced to default or is bankrupted until and unless the debt owed is restructured.
Mortgages, legacies, simple contractual debts and negotiable instruments maybe discharged by novation