Document background
The Debt Novation Agreement is a crucial legal instrument used in the Philippine business environment when parties wish to substitute an existing debt obligation with a new one. This document becomes necessary in various scenarios, such as corporate restructuring, debt refinancing, or when there's a need to change key terms of existing debt obligations. Governed by Philippine law, particularly the Civil Code's provisions on novation (Articles 1292-1294), the agreement must clearly establish the parties' intention to extinguish the original obligation and create a new one. The document typically includes detailed information about both the original and new debt arrangements, necessary representations and warranties, and relevant security arrangements. It's particularly important in corporate and financial transactions where debt obligations need to be transferred or substantially modified while maintaining legal certainty and protecting all parties' interests.
