# How Does a Novation Differ from an Assignment in Handling Contractual Obligations? ▴ Question

**Published:** 2025-08-04
**Categories:** Question

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## Concept

Understanding the operational distinction between novation and assignment is fundamental to grasping how [contractual risk](https://prime.greeks.live/area/contractual-risk/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) and reward are managed and transferred. At its core, the choice between these two legal mechanisms dictates the very structure of a party’s ongoing relationship with a contract after a transfer has occurred. An assignment is a [transfer of rights](https://prime.greeks.live/area/transfer-of-rights/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite), while a novation is the substitution of a party. This is the foundational principle from which all other strategic and executional considerations flow.

When a party assigns a contract, they are essentially carving out the benefits ▴ the rights to receive performance, such as payments or the delivery of goods ▴ and handing them to a third party. The [original party](https://prime.greeks.live/question/from-a-legal-perspective-how-does-novation-alter-the-fundamental-rights-of-the-original-counterparties/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite), the assignor, remains tethered to the contract, still bound by all its original duties and obligations. If the [other original party](https://prime.greeks.live/question/from-a-legal-perspective-how-does-novation-alter-the-fundamental-rights-of-the-original-counterparties/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) fails to perform, the assignor is still the one who must answer for the breach.

This creates a tripartite relationship where the assignee holds the rights, the assignor retains the obligations, and the original counterparty’s duties are now owed to a new entity. The [original contract](https://prime.greeks.live/question/from-a-legal-perspective-how-does-novation-alter-the-fundamental-rights-of-the-original-counterparties/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite), however, remains intact.

[Novation](https://prime.greeks.live/area/novation/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) operates on a different plane entirely. It is a process of substitution, not mere transfer. A novation extinguishes the original contract and replaces it with a new one. The [outgoing party](https://prime.greeks.live/question/what-is-the-process-for-a-multi-party-rfq/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) transfers both its rights and its obligations to a new party.

This act requires the consent of all parties involved ▴ the outgoing party, the [incoming party](https://prime.greeks.live/question/what-is-the-process-for-a-multi-party-rfq/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite), and the remaining original party. Once novated, the outgoing party is fully released from the contract, with no lingering liability. The new party steps directly into their shoes, assuming the entire [contractual relationship](https://prime.greeks.live/question/can-a-contractual-right-to-setoff-exist-without-the-mutuality-of-obligation-under-the-us-bankruptcy-code/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite). This clean break is the defining characteristic of a novation. The original contractual relationship is severed, and a new one is forged.

> An assignment transfers contractual rights, leaving obligations with the original party, whereas a novation transfers both rights and obligations, creating a new contractual relationship.

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## What Is the Core Difference in Liability

The allocation of liability marks a significant divergence [between assignment](https://prime.greeks.live/question/what-are-the-primary-differences-between-a-novation-and-an-assignment-in-contract-law/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) and novation. In an assignment, the assignor remains liable for the performance of the contract. Should the assignee fail to perform the assigned duties, the [other original](https://prime.greeks.live/question/from-a-legal-perspective-how-does-novation-alter-the-fundamental-rights-of-the-original-counterparties/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) party to the contract can still hold the assignor responsible.

This residual [liability](https://prime.greeks.live/area/liability/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) is a critical factor in the decision to assign rather than novate. The assignor is not released from their commitments; they have simply delegated the right to receive the benefits of the contract.

Conversely, a novation provides a complete release of liability for the outgoing party. By creating a new contract, the novation severs the legal ties between the original parties. The incoming party assumes all responsibilities, and the outgoing party can walk away with no further [contractual obligations](https://prime.greeks.live/area/contractual-obligations/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite). This is particularly important in scenarios where a party wishes to exit a long-term contract or a business is being sold, and the new owner needs to take over existing agreements.

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## Strategy

The strategic application of [assignment](https://prime.greeks.live/area/assignment/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) versus novation hinges on the desired outcome of the contractual transfer. The choice is a function of risk tolerance, the nature of the underlying obligations, and the long-term relationship between the parties. A party looking to transfer the economic benefits of a contract while retaining control over its execution might favor an assignment.

This approach is common in financing arrangements where, for instance, a company assigns its right to receive future payments to a lender as security for a loan. The company continues to provide the goods or services as stipulated in the contract, ensuring performance standards are met, while the lender simply receives the resulting payments.

Novation, with its requirement for all-party consent, is a more involved process but offers a definitive exit. This makes it the preferred strategy for business sales, corporate restructurings, or when a contractor on a large project is replaced. The key is that the remaining party must agree to the new arrangement, which often involves a careful assessment of the incoming party’s ability to perform the contractual obligations. The strategic decision to pursue a novation is therefore as much about negotiation and relationship management as it is about legal mechanics.

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## Consent Requirements a Strategic Consideration

A pivotal difference that shapes the strategic choice between assignment and novation is the requirement for consent. An assignment generally does not require the consent of the [other party](https://prime.greeks.live/question/what-is-the-process-for-a-multi-party-rfq/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) to the contract, unless the contract explicitly prohibits it. The assignor can transfer their rights unilaterally. The law recognizes that the transfer of a right to receive a benefit does not fundamentally alter the nature of the obligation for the other party.

Novation, however, is a consensual process. All parties ▴ the original parties and the new party ▴ must agree to the novation for it to be valid. This is because a novation creates a new contract and extinguishes the old one.

The remaining party is being asked to accept a new party as their counterparty, which could have significant implications for the performance of the contract. This requirement for consent can make novation a more complex and time-consuming process than assignment.

> The choice between assignment and novation is driven by whether the goal is to transfer only benefits or to completely substitute one party for another, which in turn dictates the level of consent required.

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## Comparing Assignment and Novation

The following table illustrates the key distinctions between assignment and novation:

| Feature | Assignment | Novation |
| --- | --- | --- |
| Transfer | Transfers rights only. | Transfers both rights and obligations. |
| Original Contract | Remains in force. | Extinguished and replaced by a new contract. |
| Consent | Consent of the other original party is not usually required. | Consent of all parties is required. |
| Liability | The assignor remains liable. | The outgoing party is released from liability. |

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## Execution

The execution of an assignment or a novation requires careful attention to legal formalities to ensure the transfer is valid and enforceable. For an assignment to be effective, the assignor must clearly express their intention to transfer their rights to the assignee. While oral assignments can be valid in some cases, a written agreement is always advisable to avoid disputes. A statutory assignment, which provides the assignee with the right to sue the other party directly, has specific requirements, such as being in writing and providing notice to the other original party.

Executing a novation is inherently more complex due to the need for a tripartite agreement. The novation agreement must be signed by all three parties ▴ the outgoing party, the incoming party, and the remaining original party. This agreement will explicitly state that the original contract is being terminated and that a new contract is being created on the same or similar terms with the new party. The novation agreement should also include a clear release of the outgoing party from all future obligations and liabilities under the original contract.

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## When to Use Assignment or Novation

The decision to use an assignment or a novation depends on the specific circumstances of the transaction. Here are some common scenarios:

- **Assignment** is often used in:

<li>**Financing** ▴ A business assigns its accounts receivable to a lender.

- **Factoring** ▴ A company sells its invoices to a factoring company at a discount.

- **Securitization** ▴ A financial institution pools loans and sells them to investors.

</li>
- **Novation** is typically used in:

<li>**Business Sales** ▴ The buyer of a business takes over the seller’s contracts with customers and suppliers.

- **Corporate Restructuring** ▴ A company transfers contracts to a subsidiary or parent company.

- **Construction Projects** ▴ A contractor is replaced on a project, and the new contractor takes over the existing contract.

</li>

> The execution of an assignment typically involves a written agreement and notice, while a novation requires a formal agreement signed by all parties to create a new contract and extinguish the old one.

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## Key Differences in Practice

The practical implications of choosing between assignment and novation are significant. The following table summarizes some of the key practical differences:

| Practical Consideration | Assignment | Novation |
| --- | --- | --- |
| Documentation | Assignment agreement; notice to the other party. | Novation agreement signed by all three parties. |
| Complexity | Relatively straightforward. | More complex due to the need for tripartite consent. |
| Risk for Outgoing Party | Continues to be liable for contractual obligations. | Is released from all future liability. |
| Relationship with Other Party | The other party now owes their obligation to the assignee. | The other party has a new contractual relationship with the incoming party. |

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## References

- Go Legal. “What is the difference between Assignment vs. Novation.” 2024.

- Parry Field Lawyers. “Contract Assignment versus Contract Novation ▴ What’s the Difference?” 2024.

- Watson Farley & Williams. “Assignment and Novation ▴ Spot the Difference.” 2020.

- UpCounsel. “Novation vs Assignment ▴ Differences in Contract Transfers.” 2025.

- Net Lawman. “Novation And Assignment ▴ What Is The Difference?” 2024.

- LegalVision. “What is the Difference Between Assignment and Novation?” 2024.

- LegalVision UK. “Differences Between Assignment and Novation.” 2025.

- Witan Solicitors. “Novation vs Assignment ▴ Differences in Construction Contracts.” 2025.

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## Reflection

The distinction between assignment and novation, while rooted in legal doctrine, has profound implications for the strategic management of contractual relationships. The choice is a reflection of a party’s appetite for risk and its long-term objectives. Does a party seek to merely transfer an economic benefit, or does it require a complete and final exit from a contractual obligation?

The answer to this question will guide the decision-making process and ultimately shape the legal and financial landscape of the transaction. Understanding these mechanisms is not just a matter of legal compliance; it is a critical component of effective risk management and strategic planning.

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## How Does the Choice Impact Future Business Relationships

The selection of assignment or novation can also have a lasting impact on business relationships. An assignment, while simpler to execute, can create a more complex web of rights and responsibilities. The original parties remain linked, and the introduction of a third party can sometimes lead to communication challenges or disputes.

A novation, by contrast, creates a clean break and a fresh start. While it may require more upfront negotiation, it can lead to a more straightforward and transparent long-term relationship between the remaining parties.

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## Glossary

<a href="https://prime.greeks.live/area/transfer-of-rights/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
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## Transfer of Rights

Meaning ▴ The Transfer of Rights constitutes the formal conveyance of legal or beneficial ownership over a specific financial claim, asset, or contractual entitlement from one entity to another. </a><a href="https://prime.greeks.live/area/contractual-risk/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
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## Contractual Risk

Meaning ▴ Contractual Risk defines the exposure an institutional entity faces due to the potential failure of a counterparty to fulfill its obligations as stipulated within a legally binding agreement, particularly prevalent in over-the-counter (OTC) derivatives and digital asset transactions where bilateral agreements govern performance. </a><a href="https://prime.greeks.live/question/from-a-legal-perspective-how-does-novation-alter-the-fundamental-rights-of-the-original-counterparties/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
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## Other Original Party

Novation extinguishes an original contract, discharging the outgoing party's rights and duties and creating a new agreement for the incoming party. </a><a href="https://prime.greeks.live/question/from-a-legal-perspective-how-does-novation-alter-the-fundamental-rights-of-the-original-counterparties/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
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## Original Party

Novation extinguishes an original contract, discharging the outgoing party's rights and duties and creating a new agreement for the incoming party. </a><a href="https://prime.greeks.live/question/from-a-legal-perspective-how-does-novation-alter-the-fundamental-rights-of-the-original-counterparties/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![Abstract geometric design illustrating a central RFQ aggregation hub for institutional digital asset derivatives. Radiating lines symbolize high-fidelity execution via smart order routing across dark pools](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-high-fidelity-execution-architecture.jpg)

## Original Contract

Novation extinguishes an original contract, discharging the outgoing party's rights and duties and creating a new agreement for the incoming party. </a><a href="https://prime.greeks.live/question/what-is-the-process-for-a-multi-party-rfq/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
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## Outgoing Party

A multi-party RFQ is a controlled protocol for sourcing competitive, off-book liquidity while mitigating information leakage. </a><a href="https://prime.greeks.live/area/novation/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
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## Novation

Meaning ▴ Novation defines the process of substituting an existing contractual obligation with a new one, effectively transferring the rights and duties of one party to a new party, thereby extinguishing the original contract. </a><a href="https://prime.greeks.live/question/can-a-contractual-right-to-setoff-exist-without-the-mutuality-of-obligation-under-the-us-bankruptcy-code/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
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## Contractual Relationship

A contractual setoff right is unenforceable in bankruptcy without the mutuality of obligation required by the U.S. </a><a href="https://prime.greeks.live/question/what-is-the-process-for-a-multi-party-rfq/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
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## Incoming Party

A multi-party RFQ is a controlled protocol for sourcing competitive, off-book liquidity while mitigating information leakage. </a><a href="https://prime.greeks.live/question/what-are-the-primary-differences-between-a-novation-and-an-assignment-in-contract-law/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
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## Between Assignment

Novation replaces a contract with a new one, transferring rights and obligations, while assignment transfers only rights under the original contract. </a><a href="https://prime.greeks.live/question/from-a-legal-perspective-how-does-novation-alter-the-fundamental-rights-of-the-original-counterparties/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
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## Other Original

Novation extinguishes an original contract, discharging the outgoing party's rights and duties and creating a new agreement for the incoming party. </a><a href="https://prime.greeks.live/area/liability/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![Sleek, abstract system interface with glowing green lines symbolizing RFQ pathways and high-fidelity execution. This visualizes market microstructure for institutional digital asset derivatives, emphasizing private quotation and dark liquidity within a Prime RFQ framework, enabling best execution and capital efficiency](https://options.greeks.live/wp-content/uploads/2025/07/prime-os-rfq-protocol-for-institutional-digital-asset-derivatives.jpg)

## Liability

Meaning ▴ A liability, within the operational framework of institutional digital asset derivatives, represents a present financial obligation arising from past transactions or events, requiring the future outflow of economic benefits. </a><a href="https://prime.greeks.live/area/contractual-obligations/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![A sleek, light interface, a Principal's Prime RFQ, overlays a dark, intricate market microstructure. This represents institutional-grade digital asset derivatives trading, showcasing high-fidelity execution via RFQ protocols](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-prime-os-execution-system.jpg)

## Contractual Obligations

Meaning ▴ Contractual Obligations denote the legally binding commitments entered into by two or more parties, mandating specific actions or forbearance, often involving the transfer of assets, services, or financial instruments at a predetermined future point. </a><a href="https://prime.greeks.live/area/assignment/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
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## Assignment

Meaning ▴ Assignment, within the context of institutional digital asset derivatives, denotes the obligation incurred by the seller of an options contract to fulfill the terms of that contract when the buyer exercises their right. </a><a href="https://prime.greeks.live/question/what-is-the-process-for-a-multi-party-rfq/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
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## Other Party

A multi-party RFQ is a controlled protocol for sourcing competitive, off-book liquidity while mitigating information leakage. </a>

**Tags:** [Transfer of Obligations](https://options.greeks.live/area/transfer-of-obligations/), [Consent Requirements](https://options.greeks.live/area/consent-requirements/), [Liability](https://options.greeks.live/area/liability/), [Contract Law](https://options.greeks.live/area/contract-law/), [Assignment](https://options.greeks.live/area/assignment/), [Privity of Contract](https://options.greeks.live/area/privity-of-contract/)	

## Discover More

- 
### [How Does a Central Clearing House Change the Dynamics of a Close out Event?](https://options.greeks.live/question/how-does-a-central-clearing-house-change-the-dynamics-of-a-close-out-event/)
![A sophisticated proprietary system module featuring precision-engineered components, symbolizing an institutional-grade Prime RFQ for digital asset derivatives. Its intricate design represents market microstructure analysis, RFQ protocol integration, and high-fidelity execution capabilities, optimizing liquidity aggregation and price discovery for block trades within a multi-leg spread environment.](https://options.greeks.live/wp-content/uploads/2025/07/institutional-grade-proprietary-architecture-driving-high-fidelity-digital-asset-derivatives-execution-via-rfq-protocols-and-optimized-market-microstructure-dynamics.jpg)

A CCP transforms a close-out from a chaotic contagion event into a predictable, centralized risk management protocol.

- 
### [What Are the Practical Difficulties of Applying the “Commercially Reasonable” Standard during a Market Crisis?](https://options.greeks.live/question/what-are-the-practical-difficulties-of-applying-the-commercially-reasonable-standard-during-a-market-crisis/)
![Abstract geometric structure with sharp angles and translucent planes, symbolizing institutional digital asset derivatives market microstructure. The central point signifies a core RFQ protocol engine, enabling precise price discovery and liquidity aggregation for multi-leg options strategies, crucial for high-fidelity execution and capital efficiency.](https://options.greeks.live/wp-content/uploads/2025/07/principals-operational-framework-optimizing-institutional-digital-asset-derivatives-rfq-protocol-execution-for-alpha-generation.jpg)

Applying the "commercially reasonable" standard in a crisis is a severe test of a firm's operational integrity under information collapse.

- 
### [Can an Economic Downturn Be Considered a Trigger for a Force Majeure Clause in a Contract?](https://options.greeks.live/question/can-an-economic-downturn-be-considered-a-trigger-for-a-force-majeure-clause-in-a-contract/)
![Sleek, futuristic metallic components showcase a dark, reflective dome encircled by a textured ring, representing a Volatility Surface for Digital Asset Derivatives. This Prime RFQ architecture enables High-Fidelity Execution and Private Quotation via RFQ Protocols for Block Trade liquidity.](https://options.greeks.live/wp-content/uploads/2025/07/advanced-institutional-digital-asset-derivatives-platform-architecture-for-high-fidelity-rfq-protocol-execution-and-price-discovery.jpg)

An economic downturn is not a force majeure event unless the contract's architecture is explicitly engineered to define it as such.

- 
### [How Does Central Clearing Impact Capital Efficiency for a Trading Firm?](https://options.greeks.live/question/how-does-central-clearing-impact-capital-efficiency-for-a-trading-firm/)
![A sophisticated digital asset derivatives RFQ engine's core components are depicted, showcasing precise market microstructure for optimal price discovery. Its central hub facilitates algorithmic trading, ensuring high-fidelity execution across multi-leg spreads. This system supports institutional prime brokerage operations, minimizing counterparty risk.](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-engine-optimizing-multi-leg-spreads-for-optimal-capital-efficiency.jpg)

Central clearing enhances capital efficiency by enabling multilateral netting, which reduces margin requirements and frees up capital.

- 
### [What Are the Key Differences between Counterparty Risk in Crypto Options and Traditional Options Markets?](https://options.greeks.live/question/what-are-the-key-differences-between-counterparty-risk-in-crypto-options-and-traditional-options-markets/)
![Glowing teal conduit symbolizes high-fidelity execution pathways and real-time market microstructure data flow for digital asset derivatives. Smooth grey spheres represent aggregated liquidity pools and robust counterparty risk management within a Prime RFQ, enabling optimal price discovery.](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-protocol-market-microstructure-prime-os.jpg)

Counterparty risk shifts from institutional failure in traditional markets to protocol integrity in crypto options.

- 
### [How Does Central Clearing Actually Reduce Systemic Risk in Derivatives Markets?](https://options.greeks.live/question/how-does-central-clearing-actually-reduce-systemic-risk-in-derivatives-markets/)
![Two spheres balance on a fragmented structure against split dark and light backgrounds. This models institutional digital asset derivatives RFQ protocols, depicting market microstructure, price discovery, and liquidity aggregation. It highlights high-fidelity execution and counterparty risk within a Prime RFQ.](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-protocols-price-discovery-liquidity-aggregation.jpg)

Central clearing re-engineers the market's risk topology, containing defaults by transforming counterparty risk into a managed, pre-funded system.

- 
### [How Does Central Clearing Facilitate Trust in Anonymous All-To-All Trading Environments?](https://options.greeks.live/question/how-does-central-clearing-facilitate-trust-in-anonymous-all-to-all-trading-environments/)
![A polished, abstract geometric form represents a dynamic RFQ Protocol for institutional-grade digital asset derivatives. A central liquidity pool is surrounded by opening market segments, revealing an emerging arm displaying high-fidelity execution data. This signifies algorithmic trading for private quotation and efficient price discovery within market microstructure.](https://options.greeks.live/wp-content/uploads/2025/07/high-fidelity-institutional-digital-asset-derivatives-rfq-protocol-system.jpg)

Central clearing facilitates trust by substituting bilateral counterparty risk with a standardized, guaranteed exposure to a single, highly regulated entity.

- 
### [What Are the Primary Legal Obstacles to a Successful Client Position Porting?](https://options.greeks.live/question/what-are-the-primary-legal-obstacles-to-a-successful-client-position-porting/)
![Intersecting digital architecture with glowing conduits symbolizes Principal's operational framework. An RFQ engine ensures high-fidelity execution of Institutional Digital Asset Derivatives, facilitating block trades, multi-leg spreads. Optimized market microstructure drives price discovery, capital efficiency for Bitcoin options, Ethereum futures.](https://options.greeks.live/wp-content/uploads/2025/07/principal-digital-asset-derivatives-rfq-engine-high-fidelity-execution.jpg)

The primary legal obstacles to client position porting are rooted in contractual restrictions, regulatory mandates, and operational frictions.

- 
### [How Does a CCP’s Default Waterfall Compare to a Bilateral Close-Out?](https://options.greeks.live/question/how-does-a-ccps-default-waterfall-compare-to-a-bilateral-close-out/)
![A robust, dark metallic platform, indicative of an institutional-grade execution management system. Its precise, machined components suggest high-fidelity execution for digital asset derivatives via RFQ protocols. The textured surface implies granular market microstructure data, supporting price discovery and atomic settlement for block trades within a prime brokerage framework.](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-execution-platform-high-fidelity-price-discovery-and-atomic-settlement-infrastructure.jpg)

A CCP's default waterfall mutualizes losses through a tiered, systemic defense, while a bilateral close-out privatizes loss via direct, contractual termination.

---

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---

**Original URL:** https://options.greeks.live/question/how-does-a-novation-differ-from-an-assignment-in-handling-contractual-obligations/
