Novation

Novation refers to the transfer by agreement of contractual obligations. For instance, the substitution of a new client for a former one, where the nature of the services being provided continues on. In this context, novation is a form of design-and-construct agreement, in which the client initially employs design consultants to carry out design and documentation, but only to the extent that the client's needs and intent are clearly identified and documented. On the basis of these documents, tenders are called and a building contractor selected. The client then 'novates' the design consultants' agreement(s) to the contractor, who takes responsibility for the completion of the project.