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The Contract Novation Letter is a crucial legal instrument used when one party to an existing contract needs to be replaced by a new party. This situation commonly arises during corporate restructuring, business acquisitions, or when a party wishes to transfer their contractual obligations to another entity. Under Philippine law, the document must comply with specific requirements outlined in the Civil Code, particularly regarding the extinction of obligations through novation. The letter clearly identifies all parties involved, references the original contract, specifies the effective date of the novation, and includes explicit consent from all parties. It's essential to note that unlike assignment, novation creates a new contractual relationship while extinguishing the old one, making it a powerful but complex legal tool that requires careful drafting and consideration of all parties' interests.

1. Letter Header and Date: Including full legal names and addresses of all parties involved - the original parties and the new party

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

3. Purpose Statement: Clear statement of intention to novate the original contract and brief context

4. Novation Terms: Specific details of the novation, including the rights and obligations being transferred

5. Effective Date: The date when the novation takes effect

6. Release and Discharge: Statement releasing the outgoing party from their obligations and any claims

7. Governing Law Statement: Confirmation that the novation is governed by Philippine law

8. Signature Blocks: Spaces for all three parties to sign (original parties and new party)