Novation

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DEFINITION of 'Novation'

1.The act of replacing one participating member of a contract with another.

2. The exchange of new debts or obligations for older existing ones.

BREAKING DOWN 'Novation'

1. All rights, duties, and terms are transferred to the new party upon consent of all parties affected.

2. A method used to extend the life of debt and obligations. Very similar to a rollover.

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