Which of the Following Statements Regarding Novation Is False

question 19

Multiple Choice

Which of the following statements regarding novation is false?

• A) Novation refers to the creation of a new contract through the substitution of a third party for one of the original parties to a contract, with everyone's consent.
• B) Novation requires that the new debtor assume complete liability.
• C) Novation requires the creditor to accept the new debtor as principal debtor, not merely as a guarantor.
• D) Novation requires the creditor to accept the new contract in full satisfaction and substitution for the old contract.
• E) Novation requires the inclusion of a force majeure clause in order to be enforceable.

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Definitions:

Business Combination

A transaction or event in which an acquirer obtains control of one or more businesses.

Acquiring Companies

Companies that acquire control of other companies by buying a majority of their stocks or assets, effectively making them subsidiaries.

Issued Capital

The total value of a company’s shares that have been issued or sold to shareholders.

Net Assets

The total assets of a company minus its total liabilities, indicating the actual value of a company's equity.