Novation

The way a lender passes on both its rights and its duty to lend. The old lender is released and the buyer steps in as if it had signed the agreement. Every party consented in advance, so a Transfer Certificate completes it. Clause 20.3 · Chapter 12

Explained in Chapter 12, Transfers and the Secondary Market, of Finance Deals & Syndicated Lending.

Also explained in Legal Due Diligence and Derivatives.

How it comes up, in Chapter 12

Novation solves this. The old contract ends, to the extent transferred, and a new one on the same terms takes its place, with the buyer in the seller's seat. Rights and obligations move together.

Read Chapter 12, Transfers and the Secondary Market →

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Related terms

Where this term lives

This term is part of one complete fictional deal, with every document attached and a test after every chapter. Open Finance Deals & Syndicated Lending → · All terms A–Z →