NOVATION

• Date: 06 February 2019

(1) "In strict legal parlance, novation of contract occurs where two contracting parties agree that a third shall stand in the relation of either of them to the other. It is a new contract which usually occurs in amalgamation of companies, or in respect of changes in partnership firms, or surety matters, the question being whether as a matter of fact the party contracting with the firm accepted the new company or the new firm or the surety as their debtor in place of the old company or the old firm or the principal. See: Perry v. National Provincial Bank of England (1910) 1 Ch. 464. for the judgment of Cozens Hardy, M.R. at p. 471 et seq. and compare with Meek v. Port of London Authority (1918) 2 Ch. 96. It does not appear to me that what transpired between the appellant and the respondent could strictly be termed "a novation". It amounted to a new contract, no doubt, extinguishing the old contract, but it could not in strict legal phraseology be termed a novation. A novation entails a new contract but not all new contracts amount to novation." - Per Aniagolu, J.S.C., in Abdulkareem v. Incar Nigeria Limited Suit No. S.C. 40/1983; (1984) 15 N.S.C.C. 603 at 633; (1984) 10 S. C. 1 at 58 - 59.

(2) "In the old Roman Law of obligations - Lex obligationes was recognised in the Institutes of Justinian as novatio and there is hardly any difference between novatio in Roman Law and novation under the common law as both import the element of consensus ad idem. The only difference is in the ingredient of "Consideration" which was not necessary for the formation of obligatio in Roman Law, "consideration" having come into the common law only in the 16th century to supplement assumpsit and indebitatus assumpsit." - Per Eso, J.S.C., in Abdulkareem v. Incar Nigeria Limited Suit No. S.C. 40/1983;(1984) 15 N.S.C.C. 603 at 614; (1984) 10 S.C. 1 at 43.

(3) "It (Halsbury’s Laws of England Third Edition Volume 8 p. 262) states: - "460. Meaning of Novation. Novation is, in effect, a form of assignment in which, by the consent of all parties, a new contract is substituted for an existing contract. Usually, but not necessarily, a new person becomes party to the new contract, and some person who was party to the old contract is discharged from further liability. The introduction of a new party prevents the new contract from being a mere accord without satisfaction, and thus affords a defence to any action upon the old contract. For novation to ensue there must be not...