novation

/noʊˈveɪʃən/

Meanings

noun

Replacement of a contract with one or more new contracts, in particular in financial markets the replacement of a contract between a particular buyer and seller with contracts between the clearing house and each party.

Examples :

"Due to the company's financial troubles, a novation occurred, and the clearing house became the new counterparty for all outstanding trade agreements. "

noun

A new contract between the original contracting parties whereby the first obligation is extinguished and a new obligation is substituted.

Examples :

"Through novation, Maria transferred her apartment lease to her friend Sarah, releasing Maria from her original rental agreement. "

law business finance commerce

Related Words

obligation noun

/ɑb.ləˈɡeɪ.ʃən/

The act of binding oneself by a social, legal, or moral tie to someone.

"My obligation to my family means I need to visit them regularly. "

financial adjective

/faɪˈnænʃəl/

Related to finances.

"The financial situation at home has improved since my uncle started his new job. "

outstanding verb

/ˌaʊtˈstændɪŋ/ /ˌaʊʔˈstændɪŋ/

To resist effectually; withstand; sustain without yielding.

"The firefighters outstanding the intense heat for hours, keeping the fire from spreading. "

particular noun

/pəˈtɪkjələ/ /pəˈtɪkjəlɚ/

A small individual part of something larger; a detail, a point.

"The teacher pointed out a particular detail in the math problem that several students missed. "

contracting verb

/kənˈtræktɪŋ/ /ˈkɑːntræktɪŋ/

To draw together or nearer; to shorten, narrow, or lessen.

"Example: "As the weather cooled down, the metal pipe started contracting, making a creaking sound." "

replacement noun

/ɹɪˈpleɪsmənt/

A person or thing that takes the place of another; a substitute.

"My old bicycle tire was flat, so I bought a replacement. "

substituted verb

/ˈsʌbstɪtjuːtɪd/ /ˈsʌbstɪtutɪd/

To use in place of something else, with the same function.

"I had no shallots so I substituted onion."

contracts noun

/ˈkɒntræktʃ/ /kənˈtrækts/

An agreement between two or more parties, to perform a specific job or work order, often temporary or of fixed duration and usually governed by a written agreement.

"Marriage is a contract."

extinguished verb

/ɪkˈstɪŋɡwɪʃt/ /ɛkˈstɪŋɡwɪʃt/

To put out, as in fire; to end burning; to quench

"The firefighter extinguished the flames with a powerful blast of water. "

agreements noun

/əˈɡriːmənts/

An understanding between entities to follow a specific course of conduct.

"to enter an agreement; the UK and US negotiators nearing agreement; he nodded his agreement."

transferred verb

/tɹænsˈfɜːd/

To move or pass from one place, person or thing to another.

"to transfer the laws of one country to another; to transfer suspicion"

counterparty noun

/ˈkaʊntərˌpɑːrti/ /ˈkaʊntərˌpɑːrdi/

The other party to a financial transaction

"In the loan agreement, the bank is one party, and the borrower is the counterparty. "