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Sunday, July 6, 2008

What Does the Word 'Novation' Mean?

Well I'm glad you asked... According to the Macquarie Dictionary, the word 'novation' is a law term and means:

...'the substitution of a new obligation for an old one, usually by the substitution of a new debtor or of a new creditor.'...

In terms of a novated lease this means that the employer - through the process of salary packaging - packages the employee's financial obligation to lease his car as part of his salary in pre tax dollars. Thus the original Financial Lease Agreement becomes a Novated Agreement.

2 comments:

Adam Reedy said...

Thanks for such a nice post through which i came to know the meaning of Novated Lease Agreement

Shank said...

superb post thans for sharing information about novated lease