Novation is the substitution of a new obligation for an existing one.
Extinction of ObligationsNovation
Section § 1530
This law explains that novation means replacing an old obligation with a new one.
novation substitution new obligation
Section § 1531
Novation is when you replace an old agreement or party with a new one. This can happen in three ways: creating a new obligation between the same parties to replace the old one, swapping in a new debtor to free the old one from their duty, or exchanging the original creditor with a new one to shift the rights to the new creditor.
Novation is made:
1. By the substitution of a new obligation between the same parties, with intent to extinguish the old obligation;
2. By the substitution of a new debtor in place of the old one, with intent to release the latter; or,
3. By the substitution of a new creditor in place of the old one, with intent to transfer the rights of the latter to the former.
novation substitution new obligation
Section § 1532
This law states that novation, which is the act of replacing an old agreement with a new one, happens through a contract and follows the same rules that apply to any contract.
Novation is made by contract, and is subject to all the rules concerning contracts in general.
novation contract rules replacing agreement
Section § 1533
If you accept someone else's promise to pay a debt on behalf of the person who owes you money, you can cancel that acceptance if the debtor stops the third person from paying. You can also cancel if that third person was already broke when you accepted their promise and you didn't know, or if they go broke before you have a chance to ask them to pay.
Section Fifteen Hundred and Thirty-three. When the obligation of a third person, or an order upon such person is accepted in satisfaction, the creditor may rescind such (such) acceptance if the debtor prevents such person from complying with the order, or from fulfilling the obligation; or if, at the time the obligation or order is received, such person is insolvent, and this fact is unknown to the creditor, or if, before the creditor can with reasonable diligence present the order to the person upon whom it is given, he becomes insolvent.
third-party obligation acceptance rescinding acceptance
