Correct option is B
Novation refers to the replacement of an existing contract or its obligations with a new one, with the consent of both parties. The key element in novation is that the original contract is extinguished, and a new contract takes its place, thereby changing the nature of the original obligation. It can occur either by changing the parties to the contract or by changing the terms or obligations of the original contract.
· Novation is covered under Section 62 of the Indian Contract Act, 1872, which states that if the parties to a contract agree to replace it with a new one, or alter its terms, the original contract is discharged.
Rescission (a):
Rescission refers to the cancellation of a contract, where the contract is completely terminated, and both parties are released from their obligations.
Renovation (c):
This term is not relevant in the legal context of contracts. It typically refers to the physical renewal or improvement of a property, not to contractual obligations.
Alteration (d):
Alteration involves modifying the terms of the original contract without extinguishing the original contract. Unlike novation, the original contract remains intact with some changes to its terms.
Information Booster:
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Novation is commonly used in commercial contracts, especially when there is a need to bring in a third party to fulfill an obligation, or when the terms of the contract need to be completely changed.
· In practice, novation is different from a mere alteration because it creates a new contract and discharges the original one.
