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Substitution vs Novation - What's the difference?

substitution | novation |

As nouns the difference between substitution and novation

is that substitution is substitution, replacement while novation is (legal) replacement of a contract with one or more new contracts, in particular in financial markets the replacement of a contract between a particular buyer and seller with contracts between the clearing house and each party.

substitution

English

Noun

(en noun)
  • the act of substituting or the state of being substituted
  • a substitute or replacement
  • (chemistry) (especially in organic chemistry) the replacement of an atom, or group of atoms, in a compound, with another

    • Derived terms

    * substitution cipher * substitution reaction * substitution rule

    Anagrams

    *

    novation

    English

    (wikipedia novation)

    Noun

    (-)
  • (legal) Replacement of a contract with one or more new contracts, in particular in financial markets the replacement of a contract between a particular buyer and seller with contracts between the clearing house and each party.
  • * Netting by novation will occur immediately upon registration of the transaction in the SCM's name. — London Clearing House submission to the CFTC [http://www.cftc.gov/opa/press98/opa4163-98-att.htm]
  • (legal) A new contract between the original contracting parties whereby the first obligation is extinguished and a new obligation is substituted.
  • * An example of a novation is where an original debt which was payable in two instalments is novated to become payable in five installments.

    • Related terms

    * novate * novatio