Novation is an agreement between three parties whereby contractual responsibility is transferred from an existing contractual party to a new party. This agreement is usually done to protect the interests of all of the parties involved and facilitates a smooth transition between the old entity and the new one. Novations are often used when companies change ownership or control, or when an original contract cannot be fulfilled because the party cannot or will not continue. The main advantage of novation is that it avoids litigation and potentially costly delays that would arise if the parties involved had to individually negotiate a new contract and/or adhere to existing regulations. It also allows for the existing rights and obligations and liabilities of all three parties to be managed and transferred to the new party. This means that the original parties are not affected, since the novation agreement allows for a consensus between the second and third parties regarding responsibility. Novation is a useful and efficient tool for parties who wish to restructure a contract that is failing or to initiate a transfer of rights and obligations. By entering into a novation agreement, the parties involved can ensure that the obligations under the original contract will still be honoured and that there will be no costly delays. This means that all parties receive the benefits they were originally expecting while still protecting their legally-binding interest in the contract.