Deed of Novation Review Tool: Risks Marked on the Novation Deed
Upload a three-party novation deed. The same file comes back with flags on the release, the assumption, the effective date and third-party consents.
Three-party novation
Pros
- ✓A three-party novation deed arrives as one file. HMRC internal manual CTM61605, fetched 11 October 2026 inside the close-company loans chapter, states that a novation can take place only by agreement of all the parties, with an intention to novate.
- ✓The same manual calls a novation the rescission of one contract and the substitution of a new one, performed by different parties: the outgoing party, the incoming party and the continuing party.
Cons
- ✗A heading that says novation is not itself the release. If the release also discharges claims that arose before the effective date, that clash goes to a solicitor with the marked file. The debt illustration on CTM61605, quoting Millett J in Collins v Addies, stays inside that tax example and is not copied onto a services deed.
Assignment of the benefit
Pros
- ✓CTM61605 calls the consent of all parties, and the intention to novate, the essential difference from an assignment. An assignment transfers the benefit. The assignee becomes entitled to sue, and the debtor consent is not necessary for the validity of the assignment.
- ✓Law of Property Act 1925 section 136 passes the legal right to a debt or other legal thing in action after an absolute assignment in writing and express written notice. The fetched section does not move the burden.
Cons
- ✗If this deed only assigns benefits, the outgoing party can remain the person the continuing party looks to for the burdens. An assignment clause or a change-of-control clause inside another contract is a different file. That checklist is not rewritten here.
What the marked deed shows
| Sentence on the deed | What the mark is looking for | What you do with the mark |
|---|---|---|
| Three parties | Outgoing party, incoming party and continuing party, on a PDF or DOCX of the whole deed. | An assignment clause, a change-of-control clause, a present IP assignment, a variation, a commercial lease or a tenancy is a different upload. |
| Release of the outgoing party | Future obligations only, accrued claims as well, or no release at all. | A heading is not the release. An accrued-liability clash goes to a solicitor with the marked file. |
| Assumption by the incoming party | The incoming party undertakes the burdens, or the sentence gives the benefits and leaves the burdens unspoken. | Section 136 does not move the burden. Do not treat that section as a novation. |
| Effective date | Blank, a date from which the substitution runs, or words that treat the incoming party as if it had always been the original party. | No statute fetched on 11 October 2026 sets that date. Read it beside the release. Do not fill a blank. |
| Third-party consents | A condition that someone who is not one of the three parties must still consent, or a consent the underlying contract requires and the deed does not show as given. | Party consent on CTM61605 is not every outsider. A missing outsider consent is not a finding that the deed is void. |
Upload the novation deed
Confirm the three parties on the pdf
In practice a counterparty sends the pdf of a three-party novation deed: outgoing party, incoming party and continuing party. Upload the whole file.
Read the four sentences on that file
Walk the release of the outgoing party, the assumption by the incoming party, the effective date and any third-party consent still written as a condition. The clause you need is the operative sentence, not the heading.
Analyse a contract
The label is Analyse a contract. The path is /document-analysis. Name which release, which assumption, which effective date and which consent you will take to a solicitor with the marked file.
Leave the other files on their own pages
An assignment clause, a change-of-control clause, a present IP assignment, a variation, a lease or a tenancy is not this upload. Drafting a new deed or collecting a signature is the wrong page.
High accrued liability
The typical mistake is to read a wide release as if it covered future performance only. If the release also wipes claims arising before the effective date, or the file never says who keeps those claims, or the assumption takes liabilities that arose before that date, send that clash to a solicitor with the marked file. Scotland and Northern Ireland are separate legal systems. The pointer on this page is England and Wales. The pass does not replace a solicitor and does not guarantee an outcome.
A three-party novation deed arrives as one file, and on that file it is not obvious whether the outgoing party is released only from future performance or also from accrued claims, whether the incoming party assumes the burdens or only the benefits, what the effective date does to performance before that date, or whether a third-party consent is still a condition. A deed of novation review tool marks those four sentences on the file you hold.
The same novation deed comes back with flags on the release of the outgoing party, the assumption by the incoming party, the effective date and third-party consents, plus a short explanation and an England and Wales pointer. Read those sentences on the pdf before you sign.
What comes back on the novation deed
You upload a PDF or DOCX. The marks stay on that novation deed, with a short explanation beside each flag and a statute pointer where a provision of England and Wales may apply. The useful object is the annotated source file, not a chat summary and not a detached score. Open the upload at document analysis. The contract review tool page, fetched 11 October 2026, describes risks highlighted on the clause, a short explanation, and statute links where a provision of England and Wales may apply. A first pass does not replace a solicitor. The result here is that annotated deed. It is not a chat, not a template, not a new draft and not a CLM.
Novation is not assignment
Before this three-party novation deed is relied on, separate a substitution of a party from a transfer of the benefit. HMRC internal manual CTM61605, fetched 11 October 2026, states that liabilities cannot be assigned, because a person is entitled to know whom to look to, and that a novation needs the agreement of all the parties and an intention to novate. An assignment, on that page, transfers the benefit, and the debtor is not a party to the assignment. Law of Property Act 1925 section 136 passes the legal right after a signed absolute assignment and written notice. It does not move the burden.
If the file in front of you is an assignment clause or a change-of-control clause inside another contract, leave that how-to on the assignment and change-of-control checklist dated 28 August 2026. One question there distinguishes a move of the benefit from a novation of obligations. Do not import its scenario. If the file is a present assignment of patents, copyright and trade secrets, use the IP assignment tool dated 9 October 2026. A release column on this deed does not make that page this page.
What the marked deed shows
The proof is four sentences highlighted together on the uploaded deed: the release of the outgoing party, the assumption by the incoming party, the effective date, and the third-party consent condition, with the CTM61605 pointer beside the release line. None of those pointers is a prediction of a judgment.
A practitioner checklist, a fill-in template or a generated replacement already lists release and consent. That does not mark this novation deed. LexisNexis UK, fetched 11 October 2026, is a drafting checklist, and its note on SI 2018/1254 concerns assignment of receivables for contracts novated on or after 31 December 2018. The regulations were not fetched. The Lawdistrict UK template, fetched the same day, leaves the effective date blank, and its clauses are not copied here. CaseMark describes a generated agreement. Sprintlaw UK (5 November 2025) and Sprintlaw Australia (3 February 2026) are letter guides. Deedee (2 September 2026), Justee (10 October 2026) and Go-Legal AI review or generate a different file. None of them returns this deed with the four sentences marked.
High accrued liability
Send the marked file to a solicitor when the release also wipes claims arising before the effective date, when the file never says who keeps those claims, or when the assumption takes liabilities that arose before that date. For example, a release of all claims against the outgoing party, beside an effective date next month, is that clash. The pass names the sentence. It does not decide the claim.
See the marks on this novation deed
Analyse a contractHow the release treats accrued claims
Mark the operative release, not the title. Flag whether it releases future obligations only, also releases accrued claims, or never releases the outgoing party. CTM61605 treats that transfer as the rescission of one contract and the substitution of a new one.
The quotation from Millett J in Collins v Addies on that page is about a debt: a debtor cannot assign a legal liability, so the transaction takes the form of a novation, called there a release of the old debt and its replacement by a new debt. That illustration is not a finding about every services claim. The three debt conditions stay in the tax example. A wider commercial release is a High mark for a solicitor.
When the incoming party takes the burdens
Flag a sentence that gives the incoming party the benefits and does not have that party undertake the obligations. CTM61605 says liabilities cannot be assigned, because a person is entitled to know whom to look to. If the paper only assigns benefits, the outgoing party can remain the person the continuing party looks to for the burdens.
Section 136(1) is the assignment mechanic, not a novation. An absolute assignment in writing under the hand of the assignor, not by way of charge only, of a debt or other legal thing in action, with express written notice to the debtor, trustee or other person, passes the legal right, the remedies and the power to give a good discharge, subject to prior equities. The pending effect is an insertion in section 52(2), not a change in the section 136 text. Revised legislation on that page may not be fully up to date. The section does not move the burden.
What the effective date does to earlier performance
Mark the effective date as the sentence that says when the substitution runs, and whether the words treat the incoming party as if it had always been a party to the original contract. No statute fetched on 11 October 2026 chooses that date. Read that sentence beside the release. Do not fill a blank date and do not declare the formula void.
For example, words that deem the incoming party to have been the original party from the start, next to a later release date, are two sentences to read together. The pass does not invent a statutory cut-off. The Lawdistrict UK template leaves the effective date blank. Its clauses are not copied here.
When a third-party consent stays a condition
Mark a sentence that still conditions the substitution on the consent of someone who is not one of the three parties, or that names a consent the underlying contract requires and does not show as given. CTM61605 requires the consent of the parties, not every outsider. Do not say a missing outsider consent makes the deed void.
Contracts (Rights of Third Parties) Act 1999 section 1 is a different question: whether a non-party may enforce a term of the deed. Section 1(1), fetched 11 October 2026, says a person who is not a party may enforce a term in their own right if the contract expressly so provides or, subject to section 1(2), the term purports to confer a benefit. Section 1(2) drops that limb where the parties did not intend enforcement by the third party. Section 1(3) requires identification by name, class or description. No known outstanding effects are recorded for section 1, and the page says revised legislation may not be fully up to date. An exclusion of the Act is not the consent flag. Do not say silence means a non-party can sue. That walk stays on the third-party rights article dated 17 September 2026. Do not turn this column into that how-to.
Consideration stays unresolved on this page
HMRC CTM61605 says there must be consideration, usually the discharge of the old contract. A UK template and a UK letter guide assert that a deed removes that argument. This page does not decide the conflict. Deed form is a separate question from the width of the release.
How deed form stays one fence
Deed form is one fence, not the page. Law of Property (Miscellaneous Provisions) Act 1989 section 1, fetched 11 October 2026, says an instrument is not a deed unless it is clear on its face that it is intended to be a deed and it is validly executed as a deed. An individual validly executes a deed only by signing in the presence of an attesting witness, or at their direction and in their presence and the presence of two attesting witnesses, and by delivery as a deed. The page records no known outstanding effects for section 1 and says revised legislation may not be fully up to date. Form does not decide the width of the release.
Companies Act 2006 section 44, fetched the same day, says that under the law of England and Wales or Northern Ireland a company executes a document by its common seal or by signature. Section 44(2) says valid execution is two authorised signatories, or a director in the presence of a witness who attests. Authorised signatories are every director and, where the company has one, the secretary. Section 46(1) says a company executes a document as a deed, for section 1(2)(b) of the 1989 Act and for Northern Ireland, only if it is duly executed and delivered as a deed. Section 46(2) presumes delivery on execution unless a contrary intention is proved. The pending effect is a substitution in Schedule 11A, not a change in the section text. Those Northern Ireland words are not a review of Northern Ireland novation law.
Witness and delivery on a deed stay on the execution article dated 25 September 2026. Authority to bind the company stays on the authority checklist dated 31 August 2026. Do not import either scenario. HM Land Registry Practice guide 8, fetched 11 October 2026, is about deeds submitted to HM Land Registry. It is not this commercial deed.
Upload the novation deed
Confirm the file is the three-party deed. A variation between the same parties is a different page and is not written here. A commercial lease stays on the commercial lease tool. If the file is a tenancy, leave it on the tenancy tool.
Release of the outgoing party, assumption by the incoming party, the effective date and third-party consents are the sentences a reader can name. An accrued-liability clash goes to a solicitor with the marked file. The pass does not guarantee an outcome and does not replace a solicitor.
FAQ
What comes back after a novation deed is uploaded?
The PDF or DOCX you uploaded, with flags on the release of the outgoing party, the assumption by the incoming party, the effective date and third-party consents, plus a short explanation and an England and Wales pointer where a provision may relate. You do not get a chat summary, a new draft, or a fill-in template.
Does a release of future performance also wipe accrued claims?
Only if the operative sentence says so. HMRC internal manual CTM61605, fetched 11 October 2026, describes a novation as the rescission of one contract and the substitution of a new one, by agreement of all the parties and with an intention to novate. The debt illustration on that page, quoting Millett J in Collins v Addies, stays inside that tax example. A release that also wipes claims arising before the effective date, or a file that never says who keeps those claims, goes to a solicitor with the marked file.
Does section 136 move the burdens onto the incoming party?
No. Law of Property Act 1925 section 136 passes the legal right to a debt or other legal thing in action after an absolute assignment in writing and express written notice, subject to prior equities. The fetched section does not move the burden. The pending effect listed beside it is an insertion in section 52(2), not a change shown in the section 136 text. A sentence that only gives the incoming party the benefits is not an assumption of the obligations.
What if the effective date is blank or retrospective?
Flag the sentence. No statute fetched on 11 October 2026 sets that date. Read it beside the release, including words that treat the incoming party as if it had always been a party to the original contract. Do not fill a blank date and do not declare the formula void.
When is a third-party consent still a condition?
When the deed still conditions the substitution on the consent of someone who is not the outgoing party, the incoming party or the continuing party, or it names a consent the underlying contract requires and does not show as given. CTM61605 requires the consent of the parties to the novation, not every outsider. Contracts (Rights of Third Parties) Act 1999 section 1 is a different question, about whether a non-party may enforce a term. A missing outsider consent is not, on any statute fetched on 11 October 2026, a finding that the deed is void.
Which files belong on a different page?
An assignment clause or a change-of-control clause belongs on the checklist dated 28 August 2026. A present assignment of patents, copyright and trade secrets belongs on the IP assignment tool dated 9 October 2026. A variation between the same parties, a commercial lease and a tenancy are different uploads. A job to draft a new deed or collect a signature is the wrong page. The pass does not guarantee an outcome and does not replace a solicitor.
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