CACI 337 Affirmative Defense—Novation

California Civil Jury Instructions CACI

337 Affirmative Defense—Novation

[Name of defendant] claims that the original contract with [name of plaintiff] cannot be enforced because the parties substituted a new and different contract for the original.

To succeed, [name of defendant] must prove that all parties agreed, by words or conduct, to cancel the original contract and to substitute a new contract in its place.

If you decide that [name of defendant] has proved this, then the original contract is not enforceable.

Directions for Use

If the contract in question is not the original contract, specify which contract it is instead of “original.”

Although there is language in Alexander v. Angel (1951) 37 Cal.2d 856, 860–861 [236 P.2d 561] that could be read to suggest that a novation must be proved by the higher standard of clear and convincing proof, an examination of the history of that language and the cases upon which the language in Alexander depends (Columbia Casualty Co. v. Lewis (1936) 14 Cal.App.2d 64, 72 [57 P.2d 1010] and Houghton v. Lawton (1923) 63 Cal.App. 218, 223 [218 P. 475]) demonstrates that the original use of the term “clear and convincing,” carried forward thereafter without analysis, was intended only to convey the concept that a novation must clearly be shown and may not be presumed. The history of the language does not support a requirement that a party alleging a novation must prove there is a high probability (i.e., clear and convincing proof) that the parties agreed to a novation. See also, sections 279 and 280 of the Restatement Second of Contracts. A party alleging a novation must prove that the facts supporting the novation are more likely to be true than not true.

Sources and Authority

Novation. Civil Code sections 1530. 1531.

“A novation is a substitution, by agreement, of a new obligation for an existing one, with intent to extinguish the latter. A novation is subject to the general rules governing contracts and requires an intent to discharge the old contract, a mutual assent, and a consideration.” (Klepper v. Hoover (1971) 21 Cal.App.3d 460, 463 [98 Cal.Rptr. 482].)

Conduct may form the basis for a novation although there is no express writing or agreement. (Silva v. Providence Hospital of Oakland (1939) 14 Cal.2d 762, 773 [97 P.2d 798].)

Novation is a question of fact, and the burden of proving it is upon the party asserting it. (Alexander v. Angel (1951) 37 Cal.2d 856, 860 [236 P.2d 561].)

“When there is conflicting evidence the question whether the parties to an agreement entered into a modification or a novation is a question of fact.” (Howard v. County of Amador (1990) 220 Cal.App.3d 962, 980 [269 Cal.Rptr. 807].)

“The ‘question whether a novation has taken place is always one of intention,’ with the controlling factor being the intent of the obligee to effect a release of the original obligor on his obligation under the original agreement.” (Alexander, supra, 37 Cal.2d at p. 860, internal citations omitted.)

“[I]n order for there to be a valid novation, it is necessary that the parties intend that the rights and obligations of the new contract be substituted for the terms and conditions of the old contract.” (Wade v. Diamond A Cattle Co. (1975) 44 Cal.App.3d 453, 457 [118 Cal.Rptr. 695].)

“While the evidence in support of a novation must be ‘clear and convincing,’ the ‘whole question is one of fact and depends upon all the facts and circumstances of the particular case,’ with the weight and sufficiency of the proof being matters for the determination of the trier of the facts under the general rules applicable to civil actions.” (Alexander, supra, 37 Cal.2d at pp. 860–861, internal citations omitted.)

Secondary Sources

1 Witkin, Summary of California Law (11th ed. 2017) Contracts, §§ 992–994
13 California Forms of Pleading and Practice, Ch. 140, Contracts, § 140.141 (Matthew Bender)
5 California Points and Authorities, Ch. 50, Contracts, §§ 50.450–50.464 (Matthew Bender)
27 California Legal Forms, Ch. 77, Discharge of Obligations, §§ 77.20, 77.280–77.282 (Matthew Bender)
2 Matthew Bender Practice Guide: California Contract Litigation, Ch. 21, Asserting a Particular Construction of Contract, 21.58[3]