A novation agreement is a type of agreement that allow one person to beinvolved in two contracts. Hence, when he is having a contract with one person, he also can make new contract with other person. This agreement also can work to replace the old agreement with the new one. This agreement is commonly made as the result of any change in the business circumstance. Unexpected financial problems and unplanned events can make the contract hard to be accomplished. However, by making this agreement people can make a change about their rights and obligations that have been stated in the contract.
You will need novation agreement if :
> You who are considered to be under the following situations deserve to have novation agreement:
> You already have a contract but want to expand your business with new colleagues and involving new contract.
> You want to substitute the old contract with the new one.
> You want to add or remove the rights obligations that are written in the previous contract.
A novation agreement covers the consents from both parties. The consent from the parties is very important because it determines whether the agreement is valid or not. If it is made as a substitution, it includes the original right s and liabilities and some of them that are changed or added or removed.
A novation agreement is started with the title “Novation Agreement”. It is followed by the identity of both parties. It commonly consists of the name of individual or company, the name of state, and the location of the office or company. Some of the requirements that should be committed by two parties are stated for the next part. It involve the date when both of the parties doing any transfer. Besides the requirements, it also provides some premises that pose by both sides. The bottom part of the agreement usually states the contractors and also certificate for the other parties involve in the agreement such as secretary of your company.
A novation agreement is important as it acts as legal documents that will protect you and your business partner from any pitfall that might happen in your business. Moreover, it is considered necessary to renew the contract because some of the points perhaps have not yet relevant with the business circumstance. Below is a sample document in Microsoft Word that you can use to get a better understanding about this agreement.
Novation Agreement Template (26.5 KiB, 760 hits)