What is the test for establishing a novation in a commercial property transaction?
British Columbia, Canada
The following excerpt is from Bancorp Financial Ltd. v. Darwai Invt. Corp., 1985 CanLII 387 (BC SC):
The three principles which are necessary to establish a novation are set out in Polson v. Wulffsohn (1890), 2 B.C.R. 39 at 43, as follows: 1. The new debtor must assume complete liability; 2. The creditor must accept the new debtor as a principal debtor and not merely as agent or guarantor; 3. The creditor must accept the new contract in full satisfaction and substitution for the old contract.
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