Definition of "novation" []

• Law Substitution of a new obligation for an old one. (noun)

American Heritage(R) Dictionary of the English Language, Fifth Edition. Copyright (c) 2011 by Houghton Mifflin Harcourt Publishing Company. Published by Houghton Mifflin Harcourt Publishing Company. All rights reserved.

• "In other cases, the person said, they were asking Credit Suisse to take over derivatives trades where the funds had exposure to European banks, a process called novation."
• "Last week's term was novation, which is defined as:"
• "These so-called novation requests picked up sharply on Tuesday, March 11, as word spread among hedge-fund traders and brokers that Bear Stearns might not be able to pay what it owed to trading partners in swaps trades, according to the Bear Stearns trading records and hedge-fund managers."