Novation
Novation replaces one party to a contract with another - the whole contract, rights and obligations, transfers to the incoming party with the consent of all three, commonly seen when a project or builder entity changes hands.
Unlike assignment (which transfers rights only), novation transfers the lot - after novation, your contract is with the new entity as if it always had been. For subcontractors it appears when projects are sold, builders restructure, or design consultants are novated from principal to builder on D&C projects.
Why it matters to subbies
Before consenting, check who you are being novated TO: their solvency, their payment history, and what happens to amounts already owed. Consent is leverage - use the moment.
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General information for Australian subcontractors, not legal advice - contract drafting and state legislation vary and change; your document and your state's Act govern. Written by Mat Kennedy at The Construction Contracts Co.