by 
The Curious Bag
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Novation exists as a legitimate idea in the realm of contract law. Although not a common term in general, there are some sectors of finance that use this.
Identification
Novation occurs when you exchange one debt for a completely new debt. It can also mean replacing one contract, or party in a contract for another.
Types
You can also "novate" a responsibility to another person, such as getting someone else to perform maintenance on a car under a warranty; this is called delegation.
Significance
You do not see general novation much these days as most people are usually not willing to completely take over a debt. The only common cases are when you and a creditor agree to restructure a contract because you cannot pay on the terms of the original.
Features
In order for novation of a new debtor (person taking the debt) to occur, he must agree to this and the lender must recognize the new debtor as the owner of the debt, not just a co-signer. Then, the creditor must absolve the original debtor of all legal obligation to the contract.
Considerations
Even if you draw up a novation agreement with the same terms as the original document, the creditor must accept the new agreement for novation to take effect.
Source:
Electric Law Library; Novation
USLegal.com; Novations Law & Legal Definition
Resource:
DuHaime's Law Dictionary; Novation
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