Document background
The Letter of Novation is a essential legal instrument in Malaysian business practice, used when there is a need to substitute one party in a contract with another party. This document type is commonly required during corporate restructuring, business acquisitions, or when contracts need to be transferred to new entities. The Letter of Novation must comply with Malaysian contract law principles, particularly the Contracts Act 1950, and requires careful drafting to ensure proper transfer of rights and obligations. It's distinct from an assignment as it transfers both benefits and burdens of the contract, and requires explicit consent from all parties involved. The document typically includes details of the original contract, the reason for novation, the effective date of the transfer, and must be properly executed and stamped to be legally enforceable in Malaysia.
