What is the legal term for substituting a new obligation for an old one?

The legal term for substituting a new obligation for an old one is known as novation. This process occurs when all parties involved agree to replace the original contract or obligation with a new one, effectively extinguishing the old obligation. In a novation scenario, the new obligation could involve a new party, and the original party is released from their responsibilities under the old contract. This is critical in situations such as in lease agreements or when transferring contractual obligations, as it ensures that all parties are aware of and agree to the changes.

Other terms do not represent the same concept. For instance, assignment refers to the transfer of rights or obligations from one party to another but does not eliminate the original party's liability. Modification means altering the terms of an existing obligation rather than replacing it entirely. Suspension refers to temporarily halting the performance of an obligation without eliminating it. Understanding these distinctions highlights why novation is specifically focused on creating a new obligation to replace an existing one.