Roy and Sheila are parties to a contract. They subse?quently agree that Tony should take Roy's place and assume all of his rights and duties under the contract. This is
A) a novation.
B) an accord and satisfaction.
C) an assignment.
D) a modification.

Question

Quizplus · Accepted Answer

A novation occurs when all parties to a contract agree to substitute a new contract for the old one. In this case, Roy is being replaced by Tony, who will assume all of Roy's rights and duties under the contract. This is a clear example of a novation. An assignment would involve Roy transferring some of his rights under the contract to Tony, but still retaining some himself. An accord and satisfaction involves a settlement of a dispute over the terms of the contract, and a modification involves a change to the existing agreement.

Roy and Sheila Are Parties to a Contract