Deed of Novation in Kenya

What is a Deed of Novation in Kenya?

In Kenya, a deed of novation is a legal document that transfers one party’s rights, risks, benefits, and obligations contained within a contract to another third party.

The purpose of a deed of novation is to substitute the identity of one party with a third party, without changing the terms of the original contract.

For example, if Party A has a contract with Party B to provide a service, but Party A wants to transfer its obligations and rights to Party C, a deed of novation can be used.

The deed of novation would transfer Party A’s obligations and rights under the contract to Party C, who would then take on all the responsibilities and benefits of the contract.

It’s important to note that a deed of novation must be agreed upon by all parties involved in the original contract, including the new third party. The deed of novation should be executed in writing and signed by all parties.

Once the deed of novation is executed, the original contract is amended to reflect the substitution of the parties.

Deed of Novation Example

Here’s an example of a Deed of Novation:

This Deed of Novation is made on [date] between [Party A] (hereinafter called the “Transferor”) and [Party B] (hereinafter called the “Transferee”) and [Party C] (hereinafter called the “Original Party”).

WHEREAS:

  1. The Transferor and the Original Party entered into an agreement on [date] (hereinafter called the “Principal Agreement”).
  2. The Transferor wishes to transfer all of its rights and obligations under the Principal Agreement to the Transferee.
  3. The Transferee is willing to accept the transfer of the Transferor’s rights and obligations under the Principal Agreement.
  4. The Original Party has agreed to the novation of the Principal Agreement in accordance with the terms of this Deed.

NOW THIS DEED WITNESSETH:

  1. The Transferor hereby transfers all of its rights, benefits, obligations, and liabilities under the Principal Agreement to the Transferee.
  2. The Transferee hereby accepts the transfer of all of the Transferor’s rights, benefits, obligations, and liabilities under the Principal Agreement.
  3. The Original Party hereby agrees to release the Transferor from all of its obligations under the Principal Agreement and to accept the Transferee as the party responsible for performing all of the obligations under the Principal Agreement.
  4. This Deed shall be binding upon and ensure to the benefit of the parties hereto and their respective successors and assigns.

IN WITNESS WHEREOF, the parties hereto have executed this Deed as of the date first above written.

[Signature of Transferor]

[Signature of Transferee]

[Signature of Original Party]

Does A Novation Need To Be A Deed?

In general, a novation does not necessarily need to be a deed and can be accomplished through a simple agreement. However, if the original contract was signed as a deed, then a deed of novation must also be used to novate it.

Real property transactions, such as the transfer of ownership of land, typically require the use of a deed. Therefore, if the original contract involves real property, a deed of novation would also be required.

Can A Deed Of Novation Be an Assignment?

No, a deed of novation cannot be an assignment. Although both novation and assignment involve the transfer of rights and obligations from one party to another, there are some key differences between the two concepts.

Novation involves the replacement of one party in a contract with a third party, where the original contract is terminated and replaced with a new one.

On the other hand, assignment typically involves the transfer of some or all of one party’s rights or obligations to a third party, while the original contract remains in force.

Therefore, a deed of novation cannot be an assignment because they are different legal concepts with different effects on the original contract. Novation results in the termination of the original contract, while assignment does not.

 

Similar Posts