novation

The termination of a contract between two parties, accompanied simultaneously by the assumption of the same obligations by one of the parties by a third party, such that the contract services continues without hiatus to the other contracting party.

The assumption of obligations and liabilities of the incoming contracting party are distinct from those of the outgoing contracting party.

Usage: The first supplier suggested that novation of the contract with a second supplier would accommodate the additional skills required by the company requiring outsourcing services.

Related Words: contract; consideration; offer; acceptance; mutual mistake; unilateral mistake; common mistake; rectification; rescission.