Contracts
What is 'novation' in contract law?
AAdding new parties to an existing contract
BReplacing an old contract or party with a new one, discharging the original obligation✓ Correct
CCancelling a contract without penalty
DRenewing a lease automatically
Explanation
Novation is the substitution of a new contract or party for an existing one, with all original parties agreeing to release the prior obligation. In real estate, this occurs when a new buyer assumes a loan and the lender releases the original borrower.
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