Review article

Renewal (Novation) according to the Obligations Act

Hrvoje Momčinović ; Constitutional Court of the Republic of Croatia, Zagreb, Croatia

Abstract

According to the Obligations act (Official gazette, Nr. 35/05 and 41/08), renewal (novation, lat. novatio) is a contract between the creditor and debtor in which the existing obligation is terminated and is replaced by a new one, while the new contract has a different main obligation or different legal basis. Change of a subsidiary obligation is not considered a novation.
For the novation it is necessary to cumulatively fulfil the following assumptions: 1. existence of a valid (old) main obligation, 2. will of the parties to exchange the existing obligation for a new one 3. difference between the main obligation or the legal basis, 4. will of the contractor (animus novandi). If the previous obligation was voidable, a legally valid novation is possible, but only if the debtor knew for the reasons of voidance. It is than taken that the debtor, by agreeing to novation, has given up the right to void the contract from which the obligation arises that is being renewed. If the debtor did not know about the voidance of the previous obligation, he is authorised to demand the termination of the contract about novation; after the contract on novation was terminated, it is considered that there was no novation and that the previous obligation did not stop.
Novation has certain similarities with settlements and exchange of fulfilment, but still differs from these institutes. With novation, there has to be an intention and expressed will of the contract parties that by creating the new obligation the old one seizes to exist, while with settlement the previous legal relation is modified so that the first claim or obligation remain in some limited form. When talking about the realtion of novation and exchange of fulfilment, the difference is the following: whit novation the existing obligation is exchanged with a new one so that the old obligation seizes to exist without fulfilment, while with exchange of fulfilment the first obligation does not seize immediately – it seizes after he completes his new obligation.
The basic legal impact of the legally valid contract on novation is shown in the fact that the previous obligation seizes to exist, and a new one starts instead. Means of insurance connected to the old obligation seize to exist as well (e.g. deposit, guarantee), as well as all the other subsidiary means – unless otherwise agreed upon in the contract.

Keywords

main obligation; novation; renewal; legal basis

Hrčak ID:

100059

URI

https://hrcak.srce.hr/100059

Publication date:

28.12.2012.

Article data in other languages: croatian german

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