Question

Novation of contract results in ______________.

• A. Cancellation of old contract
• B. A new contract in place of old one
• C. Breach of contract
• D. Material alteration in the contract

Answer 1

The correct option is B A new contract in place of old one

Under section 62 to 64 of the Contract Act, there are different methods by which a contract is discharged through mutual agreement. One such method is novation which means substitution of a new contract in place of the old existing. This new contract may be either between the same parties or between different parties, the consideration being mutually the discharge of the old contract.