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Glite Dictionary
to novate

to novate

9.9
To replace a legal contract so a new person or company becomes responsible
  • verb
  • /noʊˈveɪt/
  • Formal
translation icon : novar
  • The old lease was novated, allowing the new tenant to take over the premises.

Examples

  • Contracts can be partially or fully closed out or assigned/novated before maturity.

    Academic text (2016)

  • A transaction can be a new trade or a cash settlement of an existing trade, or it can be novated.

    Academic text (2016)

  • The DTCC labels novated transactions as "assigned" to a different counterparty and labels cash-settled transactions as "terminated." # 20.

    Academic text (2016)

  • After negotiating the new terms, the company decided to novate the contract with the supplier.

  • In the restructuring process, they novated their agreements to reflect the changes in partnership.

Surface Forms

novate infinitive
novated past
novated past participle
novating present participle
novates third person singular

Morphology

novate = novation (transparent) = nov + ate

The verb corresponds closely to the legal noun 'novation' and knowing the noun makes the verb's meaning inferable for learners familiar with the term.

Etymology

The word novate comes from Latin novare, from novus meaning 'new'. Think of novel or innovate — they all mean to make something new, so to novate a contract is to replace an old obligation with a new one.