What characterizes a novation?

A novation is a legal process through which an original party to a contract is replaced by a new party, and the original party is relieved from all liability under that contract. The characteristic that best captures this process is that the original obligor must repudiate liability and the new party must be accepted by the other party involved in the contract. This means that all parties involved must agree to this change, which distinguishes a novation from other mechanisms like assignment, where rights might simply be transferred without the need for liability repudiation.

In a novation, it's important that the original obligor unequivocally expresses that they are no longer liable for the obligations under the contract, and this must be accepted by the remaining parties. This distinguishes novation from other alternatives like assignment, where the original party may still retain some liability or obligation.

In contrast, while all parties must agree to a change in a novation—which is reflected in another option—it's the imperative nature of the original obligor repudiating liability that is the defining characteristic. Additionally, the options regarding the transfer of rights or a new rate of payment are not central to the definition of novation as they do not inherently require the repudiation of liability by the original obligor. Therefore,