Assignment and Novation: Are They the Same?

There may be many reasons that rights and/or obligations under a contract would need to be shifted to another party. For instance, if you buy the assets of company X, the contracts to which company X is a party to are an integral part of that company and you will want all those contracts to be transferred to you. As part of that process, the terms “Assignment” and “Novation” are often used interchangeably. But they are not the same thing, each method is distinct. each of them has unique features that needs to be strictly considered when deciding which is the preferred option. This article explains the critical differences between the two.