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The Contract Novation Letter is a crucial document used in the United Arab Emirates when one party to an existing contract needs to be replaced by a new party. This situation commonly arises during corporate restructuring, mergers and acquisitions, or when a contract needs to be transferred to a different entity. The document, governed by UAE Civil Code provisions, must comply with local legal requirements and clearly document the three-way agreement between the original party, the outgoing party, and the incoming party. It includes essential details such as the original contract reference, effective date of novation, and specific obligations being transferred. Unlike an assignment, which only transfers rights, a novation transfers both rights and obligations, making it a more comprehensive solution for contract transfers in the UAE business environment.

1. Date and Parties: Opening of letter identifying the date and all three parties: Original Party 1, Original Party 2, and New Party

2. Original Contract Reference: Clear identification of the original contract being novated, including its date and parties

3. Background/Recitals: Brief explanation of the current situation and reason for novation

4. Novation Statement: Clear statement of intention to novate and the effective date

5. Release and Assumption: Statement releasing the outgoing party and new party assuming the obligations

6. Governing Law: Confirmation that UAE law governs the novation

7. Execution Block: Signature blocks for all three parties