Contract Novation Letter Template for Malaysia

A Contract Novation Letter is essential in Malaysian business transactions where there is a need to transfer all rights and obligations under an existing contract from one party to another. This document is commonly used in corporate restructuring, assignment of contracts, or when a new entity takes over an existing business relationship. The letter must comply with Malaysian legal requirements, including the Contracts Act 1950 and the Stamp Act 1949, and should clearly identify all parties, reference the original contract, and explicitly state the intention to novate. It differs from an assignment as it transfers both rights and obligations, creating a new contractual relationship while extinguishing the old one. The document is particularly crucial in ensuring a smooth transition of contractual relationships while maintaining legal certainty and protecting all parties' interests under Malaysian law.

1. Letter Header: Date, addressee details, and reference number of the letter

2. Parties Identification: Clear identification of the outgoing party (transferor), incoming party (transferee), and the remaining original party

3. Original Contract Reference: Details of the original contract including date, parties, and subject matter

4. Purpose Statement: Clear statement of intention to novate the original contract

5. Novation Terms: Key terms including the effective date and transfer of rights and obligations

6. Acknowledgment and Agreement: Statement of agreement by all parties to the novation

7. Governing Law: Confirmation that Malaysian law governs the novation

8. Execution Block: Signature blocks for all three parties with witness provisions