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Novation Agreement (Construction) Template for New Zealand

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Key Requirements PROMPT example:

Novation Agreement (Construction)

"Need a Novation Agreement (Construction) for transferring a commercial building project in Auckland from Smith Construction Ltd to Jones Builders Group, following Smith's acquisition, with the transfer to be effective from March 1, 2025."

Document background
The Novation Agreement (Construction) is a critical document used in New Zealand's construction industry when there is a need to substitute one contractor for another in an existing construction contract. This situation commonly arises during corporate restructuring, contractor insolvency, project optimization, or strategic business decisions. The agreement ensures a seamless transition while protecting all parties' interests under New Zealand law, particularly the Construction Contracts Act 2002. It addresses crucial aspects such as the transfer of obligations, warranties, and securities, management of ongoing works, payment arrangements, and regulatory compliance. The document is essential for maintaining project continuity while properly documenting and managing the legal and practical implications of the contractor substitution.
Suggested Sections

1. Parties: Identifies the Original Contractor (Outgoing Party), the Employer/Principal, and the New Contractor (Incoming Party)

2. Background: Recitals explaining the original contract, the reason for novation, and the parties' intentions

3. Definitions and Interpretation: Defines key terms used in the agreement and establishes interpretation principles

4. Novation: Core clause establishing the transfer of rights and obligations from the Original Contractor to the New Contractor

5. Release and Assumption of Obligations: Details the release of the Original Contractor and assumption of obligations by the New Contractor

6. Outstanding Payments: Addresses treatment of payments due under the original contract and cut-off dates

7. Warranties and Representations: Warranties from all parties, especially the New Contractor's capacity to perform the contract

8. Construction-Specific Obligations: Addresses ongoing works, site possession, and construction-specific requirements

9. Indemnities: Indemnities between parties, particularly regarding pre and post-novation liabilities

10. General Provisions: Standard boilerplate clauses including governing law, notices, and entire agreement

Optional Sections

1. Securities and Guarantees: Required when there are existing bonds, guarantees, or securities that need to be replaced or transferred

2. Intellectual Property: Needed when the construction contract involves significant design elements or proprietary methods

3. Subcontractor Provisions: Include when existing subcontractor relationships need to be addressed

4. Insurance Arrangements: Required when specific insurance policies need to be transferred or new policies put in place

5. Dispute Resolution: Optional detailed dispute resolution procedures beyond standard provisions

6. Step-In Rights: Include when the agreement needs to address financier or principal step-in rights

7. Transitional Arrangements: Required for complex projects where handover cannot occur instantaneously

Suggested Schedules

1. Original Contract: Copy or details of the contract being novated

2. Outstanding Works: List of incomplete works and their status at novation

3. Payment Schedule: Details of outstanding payments, retention monies, and payment arrangements

4. Transferred Assets and Equipment: Inventory of construction equipment and materials being transferred

5. Existing Securities: Details of bonds, guarantees, and securities under the original contract

6. Required Consents: List of consents required from third parties for the novation

7. Novation Certificate: Form of certificate confirming completion of novation requirements

Authors

Alex Denne

Head of Growth (Open Source Law) @ ºÚÁÏÊÓÆµ | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

Relevant legal definitions
Clauses


































Relevant Industries

Commercial Construction

Infrastructure

Residential Development

Industrial Construction

Mining

Energy

Public Works

Healthcare Construction

Education Construction

Retail Development

Relevant Teams

Legal

Construction

Commercial

Operations

Procurement

Risk Management

Project Management

Finance

Compliance

Contract Administration

Relevant Roles

Construction Manager

Project Manager

Contract Administrator

Legal Counsel

Commercial Manager

Quantity Surveyor

Chief Executive Officer

Operations Director

Risk Manager

Procurement Manager

Site Manager

Construction Director

General Counsel

Project Director

Financial Controller

Industries







Teams

Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks,  Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination,  Severance Pay, Governing Law, Entire Agreemen

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