Novation is a legal process that replaces one party in a contract with another, transferring all rights and obligations. This means that the original party is released from their responsibilities, and the new party takes over the contract as if they were the original signatory. Novation is commonly used in business transactions, such as when a company sells its assets or when a tenant transfers their lease to someone else. In order for novation to occur, all parties involved must agree to the change. This ensures that the new party is accepted and that the original contract remains valid. Novation is different from assignment, where only the benefits of a contract are transferred, but the original party remains liable.