What must happen for a novation to be legally recognized?

For a novation to be legally recognized, mutual agreement from all involved parties is essential. Novation is the process whereby a new party replaces one of the original parties in a contract, transferring all rights and obligations to the new party while extinguishing the original party's involvement. This requires the consent of all parties: the original parties must agree to the substitution, and the new party must also accept the obligation and benefits of the contract.

This mutual agreement is critical to ensure that all parties are aware of and accept the changes being made, which brings about legal certainty and protects the interests of everyone involved. Without the consent of all parties, the novation cannot be validated, as unilateral action by one party does not confer the same legal effect.

In contrast, while at least two parties must agree to form a contract, this is more about the foundational principle of contract law rather than the specific condition necessary for a novation. A mere written notice does not suffice, as the consent must be mutual, and one party initiating the change alone is insufficient without agreement from all other parties.