Novation Agreement Meaning In Hindi

Another classic example is that Company A enters into a contract with Company B and a novation is included to ensure that when B sells, merges or transfers the core of its business to another company, the new entity assumes the obligations and commitments that Company B has with Company A under the contract. Therefore, as far as the contract is concerned, a buyer, a merged entity or a purchaser of company B follows in the footsteps of company B with regard to its obligations vis-à-vis company A. In the event of such a change, a “novation agreement” may be signed under the original contract[5]. This is a common practice in contracts with government authorities; An example of the United States Anti-Assignment Act is that the government agency that originally issued the contract must agree to such a transfer or that it is automatically invalidated by law.