Novation Agreement Template
Novation agreement template for a new person to become party to and bound by an agreement in place of one of the original parties. The original party is released from its obligations under the agreement.
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When do I use this document?
- for the novation of a contract or agreement
- for a new party to replace one of the original parties to the contract
- where the other original party to the contract consents to the novation
- for a contract governed by English law
What are the key features?
- 9 clauses over 3 pages
- agreement in the form of a Deed of Novation
- wording for replacement party to become party to the novated contract
- alternative wording depending on whether the replaced party will be discharged from:
- all liability under the contract from its commencement
- liability under the contract from the date of novation
- indemnity from the new party in favour of the replaced party for failure to perform the novated contract
What else do I need to know?
A novation agreement template is used where the original parties to the agreement have agreed that a new party should replace one of them and assume the obligations and liabilities of the replaced party.
Novation is an alternative to assignment – assignment of a contract can only apply to the benefit of a contract, which are the rights of a party under the contract. The burden of a contract (the party’s performance obligations) cannot be assigned under English law. If one party wants to transfer both the benefit and the burden of a contract, the contract will need to be novated.
Under a novation, the contract is effectively replaced with a new contact and the new party to the contract is treated as an original party to the contract in place of the departing party. Novation requires the consent of the remaining original party to the contract and is documented in a novation agreement or deed of novation between the three parties.
Under the novation agreement:
- the original parties to the agreement agree that the new party takes the place of one of the original parties
- the new party agrees to perform the obligations of the replaced party and the remaining party agrees to accept the new party’s undertaking to perform these obligations
- the new party can either agree to be liable for all the obligations of the replaced party from the start of the agreement or only for its own performance obligations from the date of novation
What other documents are available?
For a template contract assignment, see
When do I use this document?
- secured loan agreement for a secured loan of a fixed amount to be drawn in a single advance
- for a borrower which is a company incorporated in England and Wales
- for a loan repayable on a single repayment date or in instalments
What are the key features?
- easy to edit, with 21 clauses over 13 pages
- single advance of specified loan amount
- regular interest payments at either fixed or floating interest rate by reference to specified bank’s base rate of interest
- repayment either on a single repayment date or in instalments
- undertakings from the borrower, including to provide information to the lender and prohibition on granting security and additional borrowings
- events of default, including a failure by the borrower to repay the loan or interest, leading to the lender having the right to demand immediate repayment
What else do I need to know?
The security would need to be created and governed by a separate security document between the borrower and the lender, depending on the nature of the secured property or assets. Examples of security documents include:
- a charge over property
- a charge over shares
- a debenture, containing fixed and floating charges over all of the borrower’s assets and undertaking
What other documents are available?
For a form of unsecured loan document, see
For forms of unsecured and secured facility agreements, for advances of loans in several lump sums, see
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Updated by a lawyer on 31/07/2025
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