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Legal Deed of Novation

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LEGAL DEED OF NOVATION

This Deed of Novation is made effective as of between Transferor Name: (Entity Type: Company Individual), and Incoming Party Name: (Entity Type: Company Individual).

RECITALS

WHEREAS, Transferor and Continuing Party Name: are parties to an agreement described as:

WHEREAS, Transferor wishes to transfer and novate all of its rights and obligations under the Original Agreement to Incoming Party, and Incoming Party has agreed to accept and assume such rights and obligations on the terms set out in this Deed; and

WHEREAS, Continuing Party has been informed of the proposed novation and has provided written consent to the extent required by the Original Agreement, as evidenced by Consent Reference:

NOW THEREFORE

In consideration of the mutual covenants and agreements contained in this Deed and other good and valuable consideration, the receipt and sufficiency of which are acknowledged, the parties agree as follows:

1. DEFINITIONS

In this Deed, unless the context otherwise requires, the following definitions apply:

"Original Agreement" means the agreement identified above between Transferor and Continuing Party together with all schedules, annexures and amendments thereto.

2. NOVATION

As from the Effective Date the parties agree that Incoming Party shall be substituted for Transferor in respect of the Transferor's rights and obligations under the Original Agreement and, in place of Transferor, Incoming Party shall assume and perform those obligations and be entitled to the benefits of those rights as if Incoming Party were the original party to the Original Agreement.

3. RELEASE

On and from the Effective Date, Continuing Party releases and forever discharges Transferor from all obligations and liabilities arising under the Original Agreement to the extent that such obligations and liabilities relate to the period on and after the Effective Date, provided that such release shall not affect any liability of Transferor arising prior to the Effective Date.

4. CONTINUING OBLIGATIONS

Nothing in this Deed shall affect the rights, liabilities or obligations of any party under the Original Agreement which arise prior to the Effective Date. All warranties, indemnities and other provisions of the Original Agreement shall remain in full force and effect except as expressly varied by this Deed.

5. CONSIDERATION

The parties acknowledge that the assumption by Incoming Party of Transferor's rights and obligations under the Original Agreement constitutes good and valuable consideration for the release of Transferor and for the undertakings contained in this Deed.

6. REPRESENTATIONS AND WARRANTIES

Each party represents and warrants to the others that it has the legal capacity and authority to enter into and perform this Deed, that this Deed constitutes a valid and binding obligation enforceable in accordance with its terms, and that the entering into of this Deed does not and will not contravene any other agreement to which it is a party.

7. INDEMNITY

Incoming Party agrees to indemnify and hold harmless Continuing Party from and against any and all liabilities, losses, claims, damages and costs incurred by Continuing Party as a direct result of Incoming Party's failure to perform any obligation assumed under the Original Agreement from the Effective Date.

8. NOTICES

All notices under this Deed must be in writing and delivered by hand, by registered post or by certified courier to the addresses above and are deemed given on the date of delivery.

9. AMENDMENTS

No amendment to this Deed shall be effective unless it is in writing and signed by the parties to this Deed.

10. WAIVER

Failure or delay by a party to enforce any right under this Deed shall not be a waiver of that right, and a single or partial exercise of any right shall not preclude any other or further exercise of that right.

11. COUNTERPARTS

This Deed may be executed in counterparts, each of which shall constitute an original but all of which together shall constitute one and the same instrument. Signatures transmitted by electronic means shall be effective as originals.

12. GOVERNING LAW

This Deed and any dispute or claim arising out of or in connection with it shall be governed by and construed in accordance with the laws of the governing_jurisdiction:

13. ENTIRE AGREEMENT

This Deed constitutes the entire agreement between the parties with respect to its subject matter and supersedes all prior agreements, understandings and negotiations, whether written or oral, relating to the novation of the Original Agreement.

14. SEVERABILITY

If any provision of this Deed is held to be invalid, illegal or unenforceable in any respect, that provision shall be severed and the remainder of this Deed shall continue in full force and effect.

15. FURTHER ASSURANCES

Each party agrees to execute and deliver such further documents and to do such further acts as may be reasonably required to give full effect to the provisions of this Deed.

ADDITIONAL INFORMATION

Transferor (Print Name):

By:

Date:

Incoming Party (Print Name):

By:

Date:

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What a Legal Deed of Novation Is and when it applies

A Legal Deed of Novation is a formal contract that transfers an existing party's rights and obligations under an original agreement to a new party, with the consent of the remaining original party. It extinguishes the old contract with respect to the outgoing party and substitutes the incoming party in its place, preserving continuity of obligations. Novation is commonly used to change counterparty in commercial contracts, assign supplier relationships, or substitute guarantors; it differs from assignment because novation requires consent and discharges the original obligor.

Why use a Legal Deed of Novation

A novation clarifies which party legally holds contract rights and duties, prevents parallel liabilities, and records mutual consent to substitute parties. It reduces ambiguity in enforcement and ensures third-party obligations continue without creating dual liability for the original party.

Why use a Legal Deed of Novation

Who typically prepares or signs a novation deed

The document suits any situation where mutual consent is required to transfer both rights and obligations and to discharge an outgoing party.

  • Corporate legal teams — prepare novation to transfer contracts during mergers or asset sales.
  • Commercial landlords and tenants — substitute tenants or guarantors on lease obligations.
  • Supply chain managers — replace suppliers while preserving service continuity.

Step-by-step: executing a Legal Deed of Novation

Follow these sequential steps to prepare, approve, and finalize a novation with minimal risk and clear recordkeeping.

  • 01
    Draft: Prepare novation referencing the original agreement and precise transfer terms.
  • 02
    Obtain Consent: Secure written consent from the non-transferring original party.
  • 03
    Signatures: Collect authorized signatures and dates from all parties and witnesses.
  • 04
    Record & Distribute: Deliver fully executed copies to all parties and record if required.

How the online novation signing workflow typically runs

Digital execution streamlines routing, authentication, and audit trail capture for the novation process.

  • Upload: Sender uploads the novation document and positions required fields.
  • Add Signers: Enter signer emails and set signer order if sequential signing is required.
  • Authentication: Choose signer authentication: email link, SMS code, or stronger methods where required.
  • Complete: Signer executes; system issues signed copies and a completed audit trail.

Essential clauses and sections to include in a professional novation deed

A well-structured deed of novation includes specific clauses that make the substitution clear, enforceable, and self-contained.

Parties

Identify the outgoing party, incoming party, and continuing party using full legal names and entity types; include contact addresses and business registration numbers where relevant.

Recitals

Concise recitals should reference the original agreement, its date, and the purpose of the novation, establishing context for the substitution and showing mutual intent.

Novation Operative Clause

An explicit clause stating that the incoming party replaces the outgoing party for all rights and obligations of the specified agreement, and that the outgoing party is released.

Consideration

If consideration is exchanged, describe the amount or form; if nominal, state that parties acknowledge receipt to support enforceability.

Governing Law

Specify the state law that governs interpretation and enforcement; choose jurisdiction where performance or parties are located for predictability.

Signatures and Authentication

Include signature blocks for all parties, dates, and any required witness or notary fields; state whether electronic signatures are accepted and the method of authentication.

Key information to record for audit and compliance

Party Names: Full legal names
Execution Dates: Signed and effective dates
Original Contract: Title and execution date
Consideration: Amount or description
Notary Details: Notary name and jurisdiction
Audit Trail: Timestamps and signer IPs

Common legal risks and potential consequences

Unauthorized Transfer: May result in liability for breach
Defective Identification: Could render novation voidable
Incorrect Effective Date: Alters obligation timing
Missing Consent: Original party can sue for damages
Recording Failure: Impacts third-party notice
Improper Signatory: Enforcement risk due to lack of authority

Avoidable mistakes when preparing a novation

  • Failing to reference the exact original agreement can create ambiguity about which obligations transfer and may permit disputes over scope.
  • Using ambiguous consideration language or omitting consideration altogether can complicate enforceability if courts require evidence of mutual exchange.
  • Allowing an unauthorized individual to sign for a corporate party without a board resolution or power of attorney risks invalidation of the novation.
  • Neglecting to update related contracts, insurance policies, or lender consents can leave the substituted party unprotected or in breach.

Typical online workflow settings to configure for a novation

Configure these settings in your eSignature platform to ensure correct signer order, authentication, and record retention.

Field Configuration
Signature Authentication Email link, SMS code, or ID verification
Routing Order Sequential or parallel signing
Auto-Reminders Enable to reduce signing delays
Storage Location Secure cloud with export options

Technical considerations for eSigning and sharing

Use a platform that provides tamper-evident signed PDFs, audit trails, and secure storage to support enforceability and recordkeeping.

  • File Formats: PDF or DOCX preferred
  • Integrations: Salesforce, NetSuite, Google Workspace
  • Auth Options: Email, SMS, KBA, RON

Practical timelines to track during novation processing

Use these target timelines to coordinate drafting, approvals, notarization, and distribution when substituting contractual parties.

Draft Completion:

Allow 3–7 business days for internal review and revisions

Consent Response:

Request counterparty consent within 7–14 days to avoid delays

Signing Window:

Complete signatures within 14–30 days of initial circulation

Recording/Notarization:

Record or notarize within 30 days where required

Distribution:

Send executed copies to parties within 5 business days

eSignature vendor pricing and capability overview for novation workflows

Compare baseline pricing and core capabilities relevant to signing and managing novation deeds; signNow is listed first per vendor ordering rules.

signNow DocuSign Adobe Sign PandaDoc HelloSign
Starting Price $8/user/mo $15/user/mo $14/user/mo $19/user/mo $15/user/mo
Free Trial 7-day free trial, no credit card required Varies by vendor Varies by vendor Varies by vendor Varies by vendor
Bulk Send Yes Yes Yes Yes No
Audit Trail Yes Yes Yes Yes Yes
HIPAA Compliant Yes Yes Yes No No
Envelope Cap No envelope cap 100 envelopes/user/year Varies Varies Varies

Practical tips for accurate and fast novation execution

Adopt these practices to reduce execution errors, speed approvals, and preserve enforceability when substituting parties.

Confirm Authority
Obtain and keep evidence of signing authority such as board resolutions, power of attorney, or corporate officer certification before signing.
Link Documents
Attach or reference the exact original agreement and any amendments to avoid ambiguity about the novated obligations.
Use Clear Language
State explicitly that the outgoing party is released and the incoming party assumes all obligations to prevent dual-liability disputes.
Record and Notify
Record with local authorities if required, notify affected third parties, and distribute executed copies promptly.

Real-world scenarios where a novation deed is used

These examples illustrate common situations and practical effects of using a Legal Deed of Novation.

Real Estate Lease Substitution

A landlord and outgoing tenant agree to substitute a new tenant into an existing lease

  • Substitute assumes lease obligations immediately
  • The novation is notarized and recorded where required so the outgoing tenant is released from future rent liability and the landlord retains a single enforceable contract.

Supplier Contract Transfer

A business sells a division and assigns supplier contracts to the buyer with supplier consent

  • Incoming party assumes performance obligations
  • Parties execute a novation to ensure uninterrupted supply, update insurance certificates, and notify customers and lenders.

Frequently asked questions about Legal Deeds of Novation

Answers to common questions cover enforceability, signing authority, notarization, revocation, and electronic execution options.


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