A more thorough explanation:

A novation is a legal agreement between two parties that allows for the substitution of a new party for an existing one. This means that the original party is replaced by a new party, and the new party takes on all the rights and obligations of the original party.

For example, let's say that Company A has a contract with Company B to provide services. However, Company A is acquired by Company C, and Company C wants to take over the contract with Company B. In this case, Company A, Company B, and Company C would need to agree to a novation, which would allow Company C to take over the contract and become the new party.

Another example of a novation could be in the case of a lease agreement. If a tenant wants to transfer their lease to a new tenant, they would need to obtain the landlord's consent and sign a novation agreement. This would allow the new tenant to take over the lease and become responsible for paying rent and following the terms of the lease.

In both of these examples, the novation agreement allows for the substitution of a new party for an existing one, with the agreement of all parties involved.