Essentials Of Novation Agreement
The fundamental difference between novation and change can be examined in the following table: all contracting parties must accept the new terms of the replaced contract. A novation contract is inoperative if the parties do not intend to modify, cancel or replace a contract. A T.S. Duraiswami Aiyar And Ors. against Krishnier, the Tribunal held that the replacement of one contract by another clearly depended on the intention of the parties. Similar observations were made in the case of Calcutta Insurance, Madras vs Thirumalai Animal And Ors. and National Insurance Co. Ltd. v.
Thirumalai Ammal And Ors. The parties are free to conclude a contract and to modify its terms by mutual agreement. If both parties agree to change the duration of the contract they have previously concluded, the new agreement becomes binding on them.