Which term refers to the substitution of a third party for one of the original parties, releasing the original party from duties under the contract?

Which term refers to the substitution of a third party for one of the original parties, releasing the original party from duties under the contract?

• A. Tender
• B. Novation
• C. Condition concurrent
• D. Anticipatory breach

Answer: (B)

Novation is the substitution of a third party for one of the original parties, releasing the original party from duties under the contract. In a novation, all parties agree to replace one contractual party with a new one, extinguishing the old contract and creating a new agreement between the remaining party and the substitute. The substitute assumes the obligations and rights, and the original party is discharged from liability. This differs from an assignment, which transfers only rights and typically leaves the original party liable unless a release is obtained; it also differs from delegation, where duties may be reassigned but the original party often remains liable. It’s not about timing of performance or repudiation, which are covered by terms like condition concurrent and anticipatory breach.

Novation is the substitution of a third party for one of the original parties, releasing the original party from duties under the contract. In a novation, all parties agree to replace one contractual party with a new one, extinguishing the old contract and creating a new agreement between the remaining party and the substitute. The substitute assumes the obligations and rights, and the original party is discharged from liability. This differs from an assignment, which transfers only rights and typically leaves the original party liable unless a release is obtained; it also differs from delegation, where duties may be reassigned but the original party often remains liable. It’s not about timing of performance or repudiation, which are covered by terms like condition concurrent and anticipatory breach.