Novation occurs when the parties replace the old contract with a new one. The clearing house practice simplifies the processes for participants who do not have the resources to verify the creditworthiness of each potential counterparty. However, the buying and selling parties are unlikely to see the clearing houses become insolvent, although this is considered unlikely. In addition, the parties agree to compensate one party, it is a legal agreement to make another party innocent – not responsible – of any loss or damage. losses incurred by the other party`s actions. The arriving party undertakes, for example, to compensate the original party for the losses incurred by the acts of the original party. For example, if A and B are parties and A agrees to replace C instead of B, the existing contract between A-B will no longer exist. Changes to the contract occur when the parties enter into a contract and one of the parties, with the agreement of the parties, wishes to amend or modify certain contractual terms. As soon as the parties sign the contract, they can only change the duration of the contract if all parties agree to the amendment.
For example, changing the date or place of delivery in a sales contract between the parties. The parties to the innovation are generally the same parties that would participate in a market. As part of an innovation agreement, the terms of the contract may provide for the replacement of one party by another party. This creates an obligation for one party instead of another. Under this type of contract, the new party will assume all obligations under this contract and the party who has transferred its obligations to another party under such a contract will not be liable for future damages. The initial contract will be unloaded. The new contract becomes binding on the parties. Apex Court in United India Insurance Co Ltd/