Thus, with respect to the Contract, a buyer, party to the merger or acquirer of Company B is following in the footsteps of Company B with respect to its obligations to Company A. Alternatively, in the event of such a change under the Original Agreement,[5] a “Novation Agreement” may be signed. This is common in contracts with government agencies; An example under U.S. anti-assignment law is that the government entity that originally issued the contract must agree to such a transfer, otherwise it is automatically invalid by law. Since novation is a complex process, all parties must agree to make the change and sign the novation agreement. The main parties include the beneficiary of the inheritance, the assignment and the other party. Novation contracts are used in business sales, acquisition transactions, and M&A transactionsS M&A processThis guide guides you through all stages of the M&A process. Learn how mergers, acquisitions, and transactions are conducted. In this guide, we describe the acquisition process from start to finish, the different types of acquirers (strategic vs. financial purchases), the importance of synergies and transaction costs. A typical example of novation in real estate law is when a tenant passes the lease to another person who makes him responsible for the payment of rent and property damage under the original lease.

In the construction industry, this is a common novation scenario when a contractor transfers certain orders to another contractor with the customer`s consent.