novation
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English
Etymology
Borrowed from Latin novātiō (“a renewing, rennovation”), from novō, from novus (“new”). Compare novel, novelty.
Pronunciation
Noun
novation (countable and uncountable, plural novations)
- (law) 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.
- 1998, London Clearing House, submission to the U.S. Commodity Futures Trading Commission
- Netting by novation will occur immediately upon registration of the transaction in the SCM's name.
- 1998, London Clearing House, submission to the U.S. Commodity Futures Trading Commission
- (law) A new contract between the original contracting parties whereby the first obligation is extinguished and a new obligation is substituted.
- An example of a novation is where an original debt which was payable in two instalments is novated to become payable in five installments.
Related terms
Translations
new contract
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