Document background
The Construction Novation Agreement is a critical legal instrument used in Canadian construction projects when there is a need to substitute one contractor for another while keeping the original construction contract in effect. This document type becomes necessary in various scenarios, such as corporate restructuring, contractor insolvency, or strategic project realignment. The Novation Agreement (Construction) must comply with provincial construction laws, including lien legislation, prompt payment requirements, and security of payment regulations. It typically includes detailed provisions for the transfer of responsibilities, treatment of existing warranties, handling of performance bonds and securities, and arrangements for ongoing works. The agreement ensures continuity of the project while protecting the interests of all parties involved, including addressing any outstanding payments, defects liability, and insurance arrangements. This document is particularly important in the Canadian context where construction projects are subject to strict provincial regulatory requirements and specific legal frameworks for contract assignment and novation.
