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Contracts typically play a large part in the day-to-day operations of a business. But in some cases, you might need to transfer contractual rights and obligations to someone else – a process that has become even more significant in today’s dynamic commercial landscape in 2025.
In such instances, you’ll need a Deed of Novation. This legal document effectively transfers the rights and obligations in a contract from one party to another, usually involving the addition of a third party. It’s an indispensable tool when you’re looking to completely shift your contractual liabilities, for example, when selling your business.
What Is The Difference Between Assignment and Novation?
So, what’s the difference between an assignment and novation?
The answer is fairly straightforward. Under an assignment, you are transferring some of your rights and obligations to another party, but you continue to retain liability for those responsibilities. This can leave you exposed if the assignee fails to perform.
Conversely, a Deed of Novation transfers all the rights and obligations under a contract entirely to another party. This process not only discharges you from the original contract but also creates a new contractual relationship between the remaining and incoming parties, ensuring that future liabilities are borne solely by the new party.
When Do I Need A Deed of Novation?
A Deed of Novation is most commonly used during business sales or restructuring – a scenario that has become increasingly prevalent in 2025.
If you’re selling your business, you’ll often have ongoing agreements, such as a Manufacturers Agreement if you run an online clothing store. In these cases, it’s crucial that such contracts be transferred completely to the buyer.
With the consent of the other contracting party, a Deed of Novation can transfer your rights and obligations under the Manufacturers Agreement to the new owner. This ensures that you are released from any lingering liabilities, giving you peace of mind as you move on.
What Does A Deed Mean, Anyway?
Whether you require an assignment or a novation, both documents are often executed as a deed.
So, what does that mean? A deed is a formal legal document that carries additional execution requirements compared to a standard contract.
Traditionally, when executing a deed, all signing parties must have independent witnesses who also sign the document. This requirement meant that physical meetings were typically necessary. However, in 2025, advances in digital technology and updated legal frameworks have paved the way for remote witnessing under strict guidelines. For more information on executing documents electronically, check out our guide to e-signatures.
In addition, reviewing your contract thoroughly before transferring it is essential. Our contract review and redraft service can help ensure that your novation is airtight and fully compliant with today’s legal standards, protecting your interests throughout the process.
Need Help?
If you need assistance with a Deed of Novation, a Deed of Assignment, or if you’re still uncertain about which option best suits your needs, we’re here to help. You might also find it useful to explore our related content on Deed of Novation and our contract review services for added guidance.
Don’t hesitate to get in touch with us at 100 730 617 or email team@sprintlaw.com.au for personalised legal advice. We’re here to ensure that your contract transfers are handled with precision, allowing you to move forward confidently in 2025 and beyond.
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