Novation and Assignment in Contract Law: A Comparative Study

Novation, rooted in the concept of creating a new contractual obligation to replace an existing one, extinguishes the original agreement, while assignment facilitates the transfer of specific rights or obligations to a third party without altering the contract's core structure. This study aims to delineate the definitions, legal frameworks, prerequisites, effects, and exceptions of these legal institutions, shedding light on their practical significance in domestic and international transactions. Employing a comparative methodology and adhering to a scholarly research style, this study examines civil law systems (Iran and France), common law traditions (England), and a hybrid statutory framework (India) in relation to novation. At the core of this inquiry lies a fundamental question: how can legal systems strike a balance between the need for contractual flexibility and the imperative of legal certainty? In Iran, novation is governed by Articles ۲۹۲ and ۲۹۳ of the Civil Code, which blend influences from French civil law with Islamic jurisprudential concepts such as hawala (debt transfer). The French Civil Code (Articles ۱۳۲۹-۱۳۳۵) adopts a structured approach, requiring clear intention and mutual consent. In England, novation is shaped by common law principles and judicial precedents like Scarf v Jardine (۱۸۸۲), viewing it as the substitution of parties or contracts and emphasizing the discharge of the original obligation. India's Contract Act of ۱۸۷۲ (Section ۶۲) mirrors the English model, adapting the doctrine of novation within a statutory framework. Assignment reveals further jurisdictional variance. Iran and France permit the transfer of both rights and obligations, subject to creditor consent for the latter, whereas England, under the Law of Property Act ۱۹۲۵ (Section ۱۳۶), restricts assignment to rights, reflecting the privity doctrine. India follows a similar limitation, with judicial flexibility in exceptional cases. Key findings highlight shared principles-such as consent requirements and debtor safeguards-alongside divergences in obligation transferability, intent, and ancillary rights continuity. These differences underscore the challenges and opportunities in harmonizing contract law across borders. The study concludes that novation and assignment are indispensable for contractual adaptability, yet their application reflects the interplay of legal heritage and policy priorities. Iran's hybrid model offers flexibility, France's codification ensures predictability, England's judicial approach prioritizes intent, and India's framework balances statute and precedent. These insights enhance the understanding of comparative contract law and inform strategies for cross-border legal practice.

Keywords:

Novation , Assignment of Contracts , Comparative Contract Law , Iranian Civil Code , French Civil Code , English Common Law