law-novation in contract law |
NOVATION AS A LEGAL CONCEPT
The party urging novation as a defense bears the burden of proof. Honeycutt v.
Billingsley, 992 S.W.2d 570, 577 (Tex.App.-Houston [1st Dist.] 1999, pet. denied).
Novation occurs if a contract evidences an intention to relinquish and extinguish
pre-existing claims and rights of action; in lieu of the old obligation, a party accepts the
promise of performance of the new obligation instead of the performance itself. Priem v.
Shires, 697 S.W.2d 860, 863-64 & n. 3 (Tex.App.-Austin 1985, no writ). The new
contract discharges the original obligation and only the new obligations may be
enforced. Id. Therefore, to prove novation, Hygiene must prove (1) the validity of a
previous obligation, (2) an agreement among all parties to accept a new contract, (3) the
extinguishment of the previous obligation, and (4) the validity of the new agreement.
Fulcrum Cent. v. AutoTester, Inc., 102 S.W.3d 274, 277 (Tex. App.-Dallas 2003, no pet.)
(citing Vickery v. Vickery, 999 S.W.2d 342, 356 (Tex. 1999)). A court may infer that a
new agreement is a novation of an earlier agreement when the new agreement is so
inconsistent with the earlier agreement that the two agreements cannot subsist together.
CTTI Priesmeyer, Inc. v. K & O Ltd. P'ship, 164 S.W.3d 675, 681 (Tex. App.-Austin
2005, no pet.) (citing Fulcrum, 102 S.W.3d at 277).
In the absence of provisions so inconsistent that both contracts cannot 365 stand, "a
second contract will operate as a novation of a first contract only when the parties to
both contracts intend and agree that the obligations of the second shall be substituted
for and operate as a discharge of the obligations of the first." Chastain v. Cooper &
Reed, 152 Tex. 322, 257 S.W.2d 422, 424 (1953). A new agreement can establish
novation as a matter of law when the state of the evidence is such that reasonable
minds cannot differ as to its effect. Id. Whether a subsequent agreement operates as a
novation of the first is a question of intent. Allstate Ins. Co. v. Clarke, 471 S.W.2d 901,
907 (Tex. Civ. App.-Houston [1st Dist] 1971, writ ref'd n.r.e.). It must clearly appear that
the parties intended a novation; novation is never presumed. Id.
Pac. Employers Ins. Co. v. Brannon, 150 Tex. 441, 448, 242 S.W.2d 185, 189 (1951) (distinguishing the law of
accord from that of novation, and stating that "a mere accord does not necessarily supersede the original claim.
. . . ").
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