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Building Contract-Novation

Building Contract-Novation:  Novation of a construction contract may occur if:  the new debtor assumes complete liability; the creditor accepts the new debtor as principal debtor and not merely as an agent or guarantor; and the creditor accepts the new contract in full satisfaction and substitution for the old contract. On the proper reading of a Tripartite Agreement between the City of Edmonton, Trans Alta and the subcontractor to Trans Alta, novation had occurred, the City stepped into the shoes of Trans Alta and was therby precluded from bringing a negligence claim against the subcontractor:  Edmonton (City) v. Trans Alta Energy Marketing Corporation, 2009 ABQB 709

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