FIDIC / Legal Reference: General contract law
The transfer of a party’s rights and obligations under a contract to a third party, with the consent of all parties. In construction, novation is most commonly used to transfer the employer’s consultancy agreements to the design-build contractor — so that the contractor takes over and becomes responsible for the design.
What it means in practice
Novation creates a new contractual relationship — the original contract between the employer and the consultant is replaced by a new contract between the contractor and the consultant. The employer is released from its obligations to the consultant, and the contractor assumes those obligations.
The scope of the novated obligations is frequently disputed — particularly where the contractor claims that design work done by the consultant before novation was defective and caused post-novation problems.
Where disputes arise
Post-novation design liability disputes are a significant source of claims in UAE design-build projects. The contractor’s remedies for pre-novation design failures depend critically on how the novation agreement was drafted.
UAE Context
Novation is commonly used in UAE two-stage procurement where the employer engages consultants for detailed design and then novates them to the winning design-build contractor. UAE Civil Code Articles 316-320 support this approach but require clear written agreement.
Related terms
Novation disputes and design liability claims require specialist contractual and technical expertise. e-Basel advises on novation arrangements and post-novation design disputes in UAE construction.
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