Indian contract act
CA Shraddha Vora
(Querist) 31 January 2015
This query is : Resolved
There is an agreement entered for lease of Premises between A (Lessor) and B (lessee). The said property is sold to C. Now party to lease agreement is to be changed. Instead of A , C is to be replaced. What is the meaning of Novation? Can parties to lease agreement change though Novation deed?
Devajyoti Barman
(Expert) 31 January 2015
Once C buys the property he steps into the shoes of the original lessor. once it is done then it incumbent on C to give a 'letter of attornment' stating the fact so B starts paying the rent to C instead of A.
Guest
(Expert) 31 January 2015
Yes, they can change. Novation means substitution of contract (here lease).
prabhakar singh
(Expert) 31 January 2015
A, THE VENDOR, TRANSFERRING TO C ,THE VENDEE. HENCE LEASE BY A TO B DONE BEFORE TRANSFER TO C IS LEGALLY BINDING UPON C.
HOWEVER IT IS ALWAYS OPEN TO PARTIES TO RENEW THEIR EXISTING CONTRACTS OF ANY KIND IN MANNER AND FASHION THEY AGREE WITH IN FRAME WORK OF LEGISLATION, IF ANY, IN THAT REGARD.
HOWEVER IN LEASE CASES, LESSEES GENERALLY AVOID INNOVATIONS IF SOME STATUTORY BENEFIT
HAS ACCRUED TO THEM AND THERE IS APPREHENSION OF CURTAILMENT THEREOF DUE TO FRESH AGREEMENT.
ajay sethi
(Expert) 31 January 2015
section62. of indian contract act
Effect of novation, rescission, and alteration of contract.—If the parties to a contract agree to substitute a new contract for it, or to rescind or alter it, the original contract need not be performed
in present case C steps into shoes of A
Rajendra K Goyal
(Expert) 31 January 2015
Novation : The substitution of a new contract for an old one. The new agreement extinguishes the rights and obligations that were in effect under the old agreement.
Further:
"novation"is the act of either:
a. replacing an obligation to perform with a new obligation; or
b. adding an obligation to perform; or
c. replacing a party to an agreement with a new party.
Yes, the parties can change.
