[2] "Novation", as a legal term, is derived from the Roman law, in which novatio was of three kinds: substitution of a new debtor (expromissio, or delegatio), of a new creditor (cessio nominum vel actionum), or of a new contract.
The 1911 Encyclopædia Britannica notes that in English law "the term ... is scarcely naturalized, the substitution of a new debtor or creditor being generally called an assignment, and of a new contract a merger.
The question whether there is a novation most frequently arises in the course of dealing between a customer and a new partnership, and on the assignment of the business of a life assurance company with reference to the assent of the policyholders to the transfer of their policies.
See especially the Life Assurance Companies Act 1872, s. 7, where the word "novations" occurs in the marginal note to the section, and so has quasi-statutory sanction.
[3] In contrast to an assignment, which is generally valid as long as the other party is given notice (except where the obligation is specific to the obligor, as in a personal service contract with a specific ballet dancer, or where assignment would place a new and special burden on the counterparty), a novation is valid only with the consent of all parties to the original agreement.
[10] Novation is not a unilateral contract mechanism, hence allows room for negotiation on the new T&Cs under the new circumstances.
[11] In the case of Galliford Try v Mott MacDonald (2008), the contracting parties had been discussing a novation of this kind but had not actually agreed it.