During discharge of a contract by agreement, when a new contract is substituted for an old contract, it is called ________.
Answer & explanation
Correct answer: option 1
The correct answer is Option (1) → Novation
During the discharge of a contract by agreement, when a new contract is substituted for an old contract, it is called Novation.
(a) Novation - A new contract is substituted for an old contract.
(b) Rescission - Certain terms or all terms of a contract are cancelled.
(c) Alteration - When certain terms of a contract are altered or modified with the mutual consent of the parties.
(d) Remission - Acceptance is made to a promise but not on the complete terms of the promise but to a lesser fulfilment of the promise.
(e) Waiver - Parties to a contract abandon their mutual rights.
(f) Merger - Certain terms of a contract or all the terms of a contract are merged into another contract with the consent of the parties.