{"id":227090,"date":"2024-07-09T17:44:51","date_gmt":"2024-07-09T04:44:51","guid":{"rendered":"https:\/\/legalvision.co.nz\/?p=227090"},"modified":"2025-06-25T18:04:02","modified_gmt":"2025-06-25T05:04:02","slug":"assignment-novation-nomination","status":"publish","type":"post","link":"https:\/\/legalvision.co.nz\/commercial-contracts\/assignment-novation-nomination\/","title":{"rendered":"Assignment, Novation and Nomination: Understanding the Key Differences"},"content":{"rendered":"\n

In your commercial transactions and contractual arrangements, you may seek ways to transfer your rights, obligations or entire contracts to third parties. However, the legal mechanisms involved in such transfers can vary significantly. If you are looking to transfer yourself as a party to a commercial transaction, there are three key ways you can do this. You can transfer a party by nomination, assignment or novation<\/a>. While they may seem similar on the surface, understanding their differences is important for ensuring compliance and protecting your interests. This article will outline the key differences between assignment, nomination and novation.\u00a0<\/p>\n\n\n\n

Nomination<\/h2>\n\n\n\n

Nomination occurs primarily in property and business purchase transactions. Nominations generally occur when you want to sign on to a transaction, but the final purchasing entity has not been incorporated yet, or they are not present to sign the contract. Generally, these transactions allow for \u201cand\/or nominee\u201d to take over the transaction for you. For example, you may sign a purchase agreement in your own name but later nominate your trust or company to complete the transaction in your place. <\/p>\n\n\n\n

Nominations do not typically require the consent of the other party. This is because, in most circumstances, if the nominated party fails to complete the transaction, the other party, known as the vendor, can seek a remedy for the failed transaction from you as the nominator. For this reason, it is best to only nominate to a party you have a large degree of control over, to avoid them defaulting and you being responsible for the transaction.\u00a0\u00a0<\/p>\n\n\n

\n \"Front\n
\n
Commercial Contracts Checklist<\/div>\n
\n

To protect your business, ensure supplier contracts meet your business\u2019 needs. Our free Commercial Contracts Checklist will help.<\/p>\n <\/div>\n \n\nDownload Now<\/a> <\/section>\n <\/div>\n\n\n\n\n

Assignment<\/h2>\n\n\n\n

With an assignment<\/a>, you, as the assignor, transfer just your contractual rights or benefits under a contract to another party, the assignee. Assignments are likely to require consent from the other original party unless the contract removes this obligation. Even if the contract does not require consent, you do have to notify the other party of the assignment. Some contracts may contain a clause that expressly prohibits you from assigning or requiring consent before the assignment can happen.  <\/p>\n\n\n\n

During an assignment, the assignee essentially steps into your shoes and receives all of your rights under the contract. Ordinarily, your obligations remain with you; those contractual duties do not transfer over to the assignee. Similarly to nominating, this means you are still liable if something goes wrong in the transaction. Some assignments may include an indemnification which allows you to walk away from all of your obligations; however, this is quite uncommon. It is also important that the obligations of the non-assigning original party cannot materially change due to your assignment taking place. <\/p>\n\n\n\n\n\n Continue reading this article below the form\n <\/i>\n<\/a>\n

\n
\n Need legal advice?\n
\n \n Call 0800 005 570<\/a> for urgent assistance.\n
\n Otherwise, complete this form, and we will contact you within one business day.\n <\/span>\n <\/div>\n\n \n\n
\n