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Sign novation agreement

hey guys today we're going to talk about the differences between assignment and novation this concept is a bit confusing for some people and even some lawyers don't know the difference and sometimes I've seen agreements and documents where they are drafted wrong me instead of assignment is innovation instead of Novation is the assignment now I will first talk about assignment for assignments you transfer the benefits to another person but you retain the burdens in other words you keep performing your obligations in the contract but you transfer some rights to a third party so for example if I lend money to John okay John I'll and $1000 to John okay John owes me $1,000 it's a debt I can assign the debt or the loan to Peter so instead of John paying me back the $1000 I do a deed of assignment whereby John had pays the $1,000 to Peter and all I need to do is notify John I can also assign the cash payouts from life insurance or endowment plans to another person since an assignment only transfers the rights under the contract the right Sonne you still retain your obligations under the contract so for example if I buy over a company from Jason Jason sells me his company I'm supposed to pay Jason the sale price in five installments okay now in the sale and purchase agreement for the silikov company there can be other other obligations like you have to keep the employees you have to do this you have to make not change the company's name you have to make sure that the companies supply suppliers and customers are still intact blah blah blah so John I'm supposed to page on the purchase price for the company five installments John can assign the payments to his friend so instead of paying the installments to his to John I pay the five in summons to his friend he assigns the debt okay to his friend but the contract for the sale of business between me and John still remains intact that means I have to perform my other applications such as the employee thing not to change the name of the company to maintain the suppliers and customers blah blah blah blah blah the assignee which is John's friend will not be a party to the contract because the content in John and me for the sales company the friend would simply be an assignee okay John simply needs to notify me to make the five installment payments to his friend how was how assignment is done assignments are usually done by way of the D of assignment always please enter into a deed of assignment when you are assigning something I'm currently involved in a high court case a High Court lawsuit where there was a verbal assignment of four hundred thousand dollar loan and there are a lot of issues about proving whether the loan was indeed a sign I know it's very difficult before you assign a debt or loan or anything check the agreement it is fairly standard for for a group most agreements to contain a no assignment clause if the agreement contains a no assignment clause then you have to obtain the consent of the other party before you assign now I'm going to talk about Novation Novation is a three party contract is a transfer of both rights and obligations under contract to a third party it's a it's a tweet is a tripartite agreement between three parties so an example of a Novation would be this I enter into a tendancy agreement with landlord okay so the agreement is between land not and me but for some reason my business is not doing well or I want to get out of the tenancy agreement so I find another tenant John so John is going to take my place okay so I cannot assign the tenancy agreement to him because I'm an assignment merely assigns the rights but not the obligations so what we would do under these circumstances is to enter into a Novation agreement a three-party agreement between John me and landlord then not has to agree to the transfer of all the rights from me to John so once the tenancy agreement has been novated to John there's a the tendancy agreement is between landlord and John for sale of business I may have contracts with a supplier or customer but when I sell my business I want to know Veit the contract the contracts between me and the customer or supplier I want to know way to the new buyer the new owner of the company so we enter in the Novation agreement customer me to assign all the rights and obligations to the new owner of the company how is innovation done is usually done by a way of a Novation agreement a Novation agreement is a very simple one-page agreement in fact you can download it online always always for goodness sake get your contracts done in writing it's very simple just google Novation agreement template you can get it done online so thanks for watching this video on the differences between assignments and novation