CA Foundation Exam  >  CA Foundation Questions  >  “Novation” means ________a)Altera... Start Learning for Free
 “Novation” means ________
  • a)
    Alteration in terms of the contract
  • b)
    Recission of the contract
  • c)
    Substitution of an existing contract with a new one
  • d)
    Remission of performance of contract
Correct answer is option 'C'. Can you explain this answer?
Most Upvoted Answer
“Novation” means ________a)Alteration in terms of the cont...
Explanation:
Novation refers to the substitution of an existing contract with a new one. It involves the release of one party from their obligations under the original contract and the introduction of a new party who assumes those obligations. Here is a detailed explanation of each option:
A: Alteration in terms of the contract
- This option refers to changes or modifications made to the terms of a contract.
- It does not involve the substitution of a new contract.
B: Recission of the contract
- Recission refers to the cancellation or termination of a contract.
- It does not involve the substitution of a new contract.
C: Substitution of an existing contract with a new one
- This option accurately describes novation, where a new contract is introduced to replace the original one.
- It involves the release of one party and the introduction of a new party.
D: Remission of performance of contract
- Remission refers to the forgiveness or reduction of a debt or obligation.
- It does not involve the substitution of a new contract.
Therefore, the correct answer is option C: Substitution of an existing contract with a new one.
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“Novation” means ________a)Alteration in terms of the contractb)Recission of the contractc)Substitution of an existing contract with a new oned)Remission of performance of contractCorrect answer is option 'C'. Can you explain this answer?
Question Description
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