novation

noun2

1. •
   Replacement of a contract with one or more new contracts, in particular in financial markets the replacement of a contract between a particular buyer and seller with contracts between the clearing house and each party.

   • Netting by novation will occur immediately upon registration of the transaction in the SCM's name. — 1998
2. •
   A new contract between the original contracting parties whereby the first obligation is extinguished and a new obligation is substituted.

   • An example of a novation is where an original debt which was payable in two instalments is novated to become payable in five installments.