novation

Meaning

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

Origin

• Borrowed from Latin novātiō, from novō, from novus. Compare novel, novelty.