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.