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:

Rate of Return

The earnings or losses accrued from an investment over a predetermined period, measured as a fraction of the investment's buying price.

Interest Rate

The interest rate is the percentage charged on the total amount borrowed or invested, representing the cost of borrowing or the earning from an investment over a specified period.

Loan

A financial amount given as a loan, anticipated to be returned with interest.

Rate of Return

The increase or decrease in the value of an investment during a set timeframe, represented as a percent of the investment's original price.