Reading time: 4 minutes

In today’s article we will take a look at the inner workings of a Deed of Novation, as well as the circumstances under which you may need one.


Over the past eighteen months you have built up a stellar dog-walking business. You used to work as a babysitter and realised that most of the families you worked for had dogs that needed caring for too – they would sit outside looking longingly at you while you kept the kids busy, as if they wanted to join in too!

You enlist the help of a friend to help set up your sparkling, user-friendly website allowing families to book your services on-demand and you use your babysitting contacts to get your first contracts. Word quickly spreads and soon you have your 9.10 labradoodle (3km), 10.15 french bull terrier (1.5km) and 10.35 kelpie (10km) regulars. With your clients booking three months in advance, you hire five additional contractors and your walkers cover the CBD and suburbs. Eighteen months in, you only walk your favourites and let your contractors take care of the rest.

An entrepreneurial friend of yours, Riad, has expressed an interest in getting to know the industry, so you arrange for Riad to take over the contract for one of your medium-sized clients. You consider your options and decide that using a deed of novation might be the best method to transfer the rights under the contract to Riad.

Before deciding to execute a deed of novation, there are a number of key factors to consider:

  • what are the terms of the original agreement?
  • will the novation have any impact on other agreements?
  • On what date will the deed of novation take effect? At signing or at some future point in time?
  • will the novation involve any additional expenses (such as stamp duty) and if so, who will be responsible for paying?

Does the original agreement or contract allow for novation?

Some contracts can expressly exclude a deed of novation. If a contract does not allow the rights of one party to be transferred to another external third party, then using a deed of novation to transfer a party’s rights under a contract may not be possible.

Do all parties agree to the novation?

Before executing a deed of novation, you must gain every party’s consent. This means that the parties to the original agreement, plus the person taking on a party’s rights must agree to the novation. One party to an agreement cannot novate their rights under a contract to a third party without the other side’s consent.

Is novation difficult?

When a contract is novated, the original contracting party must be left in the same position as she or he was in prior to the novation coming into effect. While obtaining the consent of the transferor and the transferee can be relatively easy, obtaining the consent of the original party is more difficult due to the following factors:

  • the original party may not understand the benefit to her or him of having the original contract novated and require extra information about the process, which is time consuming to provide.
  • She or he may need extra assurance to be persuaded that she or he will not be worse off as a result of the novation (this is especially common where the novation transfers service contracts between suppliers).


In summary, if you wish to transfer your rights under a contract to a third party, using a deed of novation to achieve this may be the best option. Before entering into a deed of novation, make sure that you are fully aware of the effect of the deed and that this is the right choice for you. The most important factor to consider is whether all parties have agreed to the deed – each party to the original contract must agree, as well as the person taking on the rights under the contact.

Contact LegalVision’s contract lawyers at 1300 544 755 for a fixed-fee quote and free consultation!


Redundancies and Restructuring: Understanding Your Employer Obligations

Thursday 7 July | 11:00 - 11:45am

If you plan on making a role redundant, it is crucial that you understand your employer obligations. Our free webinar will explain.
Register Now

How to Sponsor Foreign Workers For Your Tech Business

Wednesday 13 July | 11:00 - 11:45am

Need web3 talent for your tech business? Consider sponsoring workers from overseas. Join our free webinar to learn more.
Register Now

Advertising 101: Social Media, Influencers and the Law

Thursday 21 July | 11:00 - 11:45am

Learn how to promote your business on social media without breaking the law. Register for our free webinar today.
Register Now

Structuring for Certainty in Uncertain Times

Tuesday 26 July | 12:00 - 12:45pm

Learn how to structure to weather storm and ensure you can take advantage of the “green shoots” opportunities arising on the other side of a recession.
Register Now

Playing for the Prize: How to Run Trade Promotions

Thursday 28 July | 11:00 - 11:45am

Running a promotion with a prize? Your business has specific trade promotion obligations. Join our free webinar to learn more.
Register Now

Web3 Essentials: Understanding SAFT Agreements

Tuesday 2 August | 11:00 - 11:45am

Learn how SAFT Agreements can help your Web3 business when raising capital. Register today for our free webinar.
Register Now

Understanding Your Annual Franchise Update Obligations

Wednesday 3 August | 11:00 - 11:45am

Franchisors must meet annual reporting obligations each October. Understand your legal requirements by registering for our free webinar today.
Register Now

Legal Essentials for Product Manufacturers

Thursday 11 August | 11:00 - 11:45am

As a product manufacturer, do you know your legal obligations if there is a product recall? Join our free webinar to learn more.
Register Now

About LegalVision: LegalVision is a commercial law firm that provides businesses with affordable and ongoing legal assistance through our industry-first membership.

By becoming a member, you'll have an experienced legal team ready to answer your questions, draft and review your contracts, and resolve your disputes. All the legal assistance your business needs, for a low monthly fee.

Learn more about our membership

Chloe Sevil
Need Legal Help? Submit an Enquiry

If you would like to get in touch with our team and learn more about how our membership can help your business, fill out the form below.

Our Awards

  • 2020 Innovation Award 2020 Excellence in Technology & Innovation Finalist – Australasian Law Awards
  • 2020 Employer of Choice Award 2020 Employer of Choice Winner – Australasian Lawyer
  • 2020 Financial Times Award 2021 Fastest Growing Law Firm - Financial Times APAC 500
  • 2020 AFR Fast 100 List - Australian Financial Review
  • 2021 Law Firm of the Year Award 2021 Law Firm of the Year - Australasian Law Awards
  • 2022 Law Firm of the Year Winner 2022 Law Firm of the Year - Australasian Law Awards