What is the term for the substitution of a new party for the original party who is to perform?

The term "novation" refers to the process in which a new party is substituted for the original party in a contractual agreement, thereby relieving the original party of their obligations. This concept is pivotal in legal and business settings, as it ensures that the new party assumes the rights and liabilities that were originally held by the first party.

In situations where performance of a contract is required, novation solidifies the transition, ensuring that all parties involved are clear about who is now responsible for fulfilling the contract. It requires the agreement of all parties involved to be valid, making it distinct from other terms that might imply a transfer or exchange without such mutual consent.

For instance, in the context of a funeral service contract, if a funeral home wishes to transfer its obligations to another provider, novation would facilitate that by formally replacing the original funeral home with the new one in the agreement, ensuring legal enforceability and clarity.

The other terms differ in their meanings: "assignment" typically refers to the transfer of rights from one party to another without necessarily involving a new party assuming liabilities, while "exchange" and "substitution" do not pertain to the legal process of replacing parties in a contract under mutual agreement.