Novation

Novation replaces an existing obligation with a new one and extinguishes the old debt. In Swiss law, it is not presumed lightly; the parties must clearly intend substitution rather than merely modify terms, reschedule payment, or acknowledge a balance. Novation may affect securities, limitation periods, defences, and ancillary rights, so its practical consequences can be significant. It should be distinguished from assignment, assumption of debt, amendment, settlement, and refinancing, each of which may preserve more of the original legal relationship.