What is the main difference between assignment and novation?

The main difference between assignment and novation lies in the way obligations and liabilities are treated. When discussing novation, it is important to note that it involves a complete substitution of parties to a contract, which results in the release of the original party from all obligations under that contract. In essence, novation creates a new contract between the remaining party and the new party, thereby eliminating the initial party's responsibilities and rights in relation to the original agreement.

In contrast, an assignment typically refers to the transfer of benefits, rights, or interests from one party to another, while the original party remains liable for fulfilling the obligations of the contract. This means that, although the benefits may now flow to the assignee, the assignor still retains liability for any performance required under the original contract. Therefore, with an assignment, the original party's obligations are not extinguished but rather remain intact.

Overall, this distinction emphasizes how novation completely alters the relationship and responsibilities within a contractual agreement, effectively freeing the original party from any future obligations, which is a primary characteristic that distinguishes it from an assignment.