Assignment and Assumption Agreement
(Novation) (NY)

Summary

This assignment and assumption agreement template includes a novation agreement and may be used to transfer an agreement, governed by New York law, from one party to another. This template includes practical guidance, drafting notes, and alternate and optional clauses. This template addresses an assignor's transfer of rights and delegation of duties under a contract. Prior to using this template, counsel should confirm the transferability of the applicable agreement, as not all contracts are assignable. Sometimes anti-assignment clauses, legal concerns, and/or public policy issues, among other things, prevent assignment. A novation extinguishes an assignor's liability under an assigned agreement once it is executed by the assignor, the assignee, and the non-assigning party. A novation is the immediate substitution of a new contractual obligation for an existing one, with the intent of all of the affected parties to extinguish the latter. The assignee is deemed substituted for the assignor. A novation requires: (1) mutual assent, (2) immediate discharge of the old obligation, (3) consideration, and (4) the presence of a new party. See Kasper v Roberts, 464 N.Y.S.2d 642 (Civ. Ct. 1983). Without a novation, the assignor remains secondarily liable to the non-assigning party for the delegated obligations. See Worldcom, Inc. v. Prepay USA Telecom Corp., 741 N.Y.S.2d 532 (App. Div. 2002) and Mandel v. Fisher, 613 N.Y.S.2d 381 (App. Div. 1994). For more information, see Commercial Contract Assignment (NY) and Novation, Accord and Satisfaction, and Substituted Contracts. For a related template, see Novation Agreement (Short Form) (NY).