Substituting new parties to an existing obligation is known as what?

The process of substituting new parties to an existing obligation is known as novation. In real estate and contract law, novation occurs when one of the original parties to a contract is replaced by a new party, effectively creating a new contractual relationship. This means that the original party is released from their obligations, and the new party assumes those obligations, with the consent of all parties involved.

Novation is significant because it not only transfers the rights and obligations but also releases the original party from any liability related to the contract. This is distinct from other terms related to contractual obligations. For instance, assignment involves transferring rights but not necessarily obligations, while delegation refers to transferring duties but does not release the original party from obligations unless a novation occurs. The term transfer is more generic and does not specifically address the substitution of parties in a contractual relationship.