Novation and indemnity as ways to terminate an obligation

Abstract

In modern contractual practice, novation and the transfer of the indemnity are quite relevant ways of terminating the obligation, which makes it necessary to deepen the characteristics of the distinguishing features and the principles of distinguishing the mentioned mechanisms for terminating the civil obligation. It is substantiated that one of the main and primary differences between novation and indemnity, which should be paid attention to when characterizing the legal relationship between the parties, is the purpose. In particular, it is emphasized that during novation, the parties must intend to replace the existing one with a new obligation that did not previously exist between the parties and that arises on the basis of the concluded novation agreement (that is, in this case, it is not about changing the conditions or a separate condition for the performance of the original obligation). Novation is primarily characterized by the fact that the conclusion of an agreement on a new obligation generally does not terminate the legal relationship of the parties, since instead of the initial obligation, the validity of which is terminated, a new obligation agreed upon by them arises, and therefore, a legal relationship between the creditor and the debtor continues At the same time, the transfer of the object of indemnity agreed upon by the parties instead of the fulfillment of the original obligation is aimed primarily at the liquidation of legal ties between the parties. With the transfer of the assignable object, that is, with the execution of the assignable agreement, the initial obligation is terminated and the legal relationship between the parties is also definitively terminated, without further development or change in accordance with other grounds or conditions. It is this aspect that is key in the characterization of the differences between indemnity and novation in combination with other grounds for distinguishing the mentioned legal institutions, because the purpose and functions of novation and indemnity in the regulation of civil legal relations are completely different, which determines the choice by the parties of one or another way of terminating the obligation depending on the goal they expect to achieve. Some approaches in the doctrine regarding the differences between novation and indemnity have been clarified and supplemented, in particular with regard to the moment of termination of the original obligation, the peculiarities of the composition of the terminating fact.