Novation is a process in which contractual rights and obligations are transferred from one party to another. While the benefits of a contract can be transferred by assignment, this must be done through a novation agreement if the parties wish to transfer both the benefits and the charges. In the case of a well-structured novation, the responsibility is broken down as follows: respondents also reported negative economic effects due to the novation. “Additional unbudgeted costs have been reported as a significant challenge in contracts being renovated.” The effect of a novation is to perform the initial contract between two parties (the current party and the outgoing party) and replace it with a new contract between the continuing party and a new party (the new party). The incoming party must fulfill the contractual obligations (under the new contract) that were previously owed by the outgoing party under the original contract. In a traditional purchasing structure, a developer would hire the architect, and the architect (along with the other advisors) would develop and document the design. Once the documents had reached a sufficiently advanced level, the project was tendered and the winning bidder would enter into a construction contract with the developer. A novation agreement is the process in which the contractual rights and obligations (benefits and charges) of a contract are transferred from one party to another. A well-structured novation is organized by the following documents: respondents also said they were denied access to site inspections and only 21% of respondents felt they could effectively protect the interests of the original customer after the novation.
Christopher Larcos is a special advisor at Moray and Agnew Lawyers. He is also a registered architect with more than 20 years of experience and a jury for the security of payment cases. Prior to his current role, he spent a decade as a front-line lawyer at King and Wood Mallesons and Allens Linklaters. The Australian Institute of Architects has published the first results of its National Innovation Survey, a kind of purchasing model in which the contract between a client and an architect is replaced by a contract between a client and the original architect. The purpose of this article was to give an overview of innovation in the hope that architects could better understand the process and thus manage it. Design and construction as a model of purchase and innovation within this model should not adversely affect the quality of the architecture or the financial well-being of the architect.. . . .