Novated Lease

A novated lease is a way to cause an end of an old obligation. A novated lease therefore has a dual nature. A novated lease is the legal operation by which the parties decide to substitute a new obligation for a pre-existing obligation which is correlatively ended.

Thus a novated lease can be considered as a contract between the creditor and the debtor. The object of which is the modification of the obligation which unites them. However, it is above all the creation of a new obligation.

A novated lease does not end the obligation but only causes a change of ownership. Contrary to novation, where the old obligation and the effects which result from it are ended in subrogation, the obligation retains its character and the security which guarantees it. It aims either to replace one thing by another, in this case it is called real.

Or, to replace one person by another as a creditor in a bond of obligation, in this case it is called personal. Subrogation expresses the idea of replacement. Subrogation is a means of payment and transmission of debt.

The old obligation does not disappear absolutely. However, unlike debt assignment, in novation, the new creditor to a new claim and the debtor must consent to this change. Just like assignment of debt, novation can effect a change of creditor.  Novated Lease Calculator at

Being a contract binding the creditor to the debtor and whose object is the modification of the obligation which unites them, this convention must therefore obey the general conditions of validity of the contract, namely consent, capacity, object and cause. To speak of novation, there must be a succession of two obligations, a difference between them, and the parties should have the intention of animus novandi.

Indeed, only the perfect delegation operates novation. It can not, therefore, as in novation, result from the circumstances of the act. In law, the delegation was attached to novation in that it was considered as having to produce novation. That is not entirely accurate. Imperfect delegation, which is the norm, is not a novation.

It approaches the objective of a novated lease, that is to say, is a change of the objective which ends the primary debt in order to substitute another for a different object. The dation in payment is the transaction whereby the debtor transfers ownership of a thing to his creditor who agrees to receive it in lieu and in payment of the due amount. In the dation in payment, we are not in the presence of an obligation which replaces another, but only the extinction of an obligation.

The payment is made instantaneously in contrast to the novation which is in principle in the long term. However, these two concepts are fundamentally distinct. However, there are three specific conditions.

The old obligation must be valid. The aim of a novated lease is to effect the extinction of an obligation binding the creditor to the debtor. Novation can only occur if the new obligation created by the parties is valid. Here the aim is the succession of the old obligation to be ended and the new obligation to be created.