New SIDBI Grade A New Batch Starts on Nov 18

    Register

    Question

    Which of the following best describes the meaning of ‘discharge of a contract by novation’?

    A Cancellation of the contract Correct Answer Incorrect Answer
    B Alteration in one or more terms of the contract Correct Answer Incorrect Answer
    C Substitution of existing contract for a new one Correct Answer Incorrect Answer
    D All of the above Correct Answer Incorrect Answer

    Solution

    A contract can be discharged either by agreement or by a breach. Novation is one way to discharge a contract by agreement and section 62 of the India Contract, 1872 Act gives expression to the doctrine of Novation. The substitution or replacement of an old contract with a new one is termed as Novation. It takes place with the consent and agreement of both the parties to a contract thus with the creation of new contractual obligations, the old ones are discharged. The doctrine of Novation exists to give expression to the concept that parties to a contract should be competent to add, subtract or vary the terms of the contract before its breach with the help of a new contract.

    Practice Next