novation

noun

1. (countable, uncountable)Replacement of a contract with one or more new contracts, in particular in financial markets the replacement of a contract between a particular buyer and seller with contracts between the clearing house and each party.

   “1998, London Clearing House, submission to the U.S. Commodity Futures Trading Commission http://www.cftc.gov/opa/press98/opa4163-98-att.htm Netting by novation will occur immediately upon registration of the transaction in the SCM's name.”

   “A similar novation of infrastructure ownership was seen as a logical development for the operation of Merseyrail services. But this has remained with Network Rail, […].”

2. (countable, uncountable)A new contract between the original contracting parties whereby the first obligation is extinguished and a new obligation is substituted.

   “An example of a novation is where an original debt which was payable in two instalments is novated to become payable in five installments.”