Novation Agreement (Ghana)
Novation Agreement
NOVATION AGREEMENT Governed by the Contracts Act 1960 (Act 25), Republic of Ghana
This Novation Agreement is entered into on [Novation Date] among: (1) [Outgoing Party Name], of [Outgoing Party Address] (the "Outgoing Party"); (2) [Incoming Party Name], of [Incoming Party Address] (the "Incoming Party"); and (3) [Continuing Party Name], of [Continuing Party Address] (the "Continuing Party").
Recitals
(A) The Outgoing Party and the Continuing Party are parties to the [Original Contract Title] dated [Original Contract Date] (the "Original Contract"). (B) The parties wish to novate the Original Contract so that the Incoming Party is substituted for the Outgoing Party with effect from the Effective Date, and the Outgoing Party is released from all obligations under the Original Contract arising on or after the Effective Date. NOW IT IS AGREED as follows:
1. Novation
With effect from [Effective Date] (the "Effective Date"), the Incoming Party is substituted for the Outgoing Party as a party to the Original Contract and assumes all the rights and obligations of the Outgoing Party under the Original Contract.
The Continuing Party consents to the substitution of the Incoming Party for the Outgoing Party and agrees to be bound by the Original Contract as if the Incoming Party were an original party to the Original Contract in place of the Outgoing Party.
The Continuing Party releases and discharges the Outgoing Party from all obligations under the Original Contract that arise on or after the Effective Date.
Treatment of liabilities arising before the Effective Date: [Pre-Novation Liabilities].
2. Warranties
The Outgoing Party warrants that: (a) the Original Contract is in full force and effect as at the date of this Agreement; (b) there are no existing material breaches or disputes under the Original Contract; and (c) all obligations under the Original Contract due for performance before the Effective Date have been performed.
3. Governing Law and Dispute Resolution
This Agreement is governed by the laws of the Republic of Ghana. Any dispute arising out of or in connection with this Agreement shall be referred to the [Governing Law Court].
Signatures
IN WITNESS WHEREOF the parties have executed this Novation Agreement on the date first written above.
Outgoing Party
________________
Signature
Incoming Party
________________
Signature
Continuing Party
________________
Signature
What Is a Novation Agreement (Ghana)?
A Novation Agreement in Ghana governs the relationship between the parties by fixing what each must do.
Novation under Ghanaian law extinguishes the original contract and replaces it with a new contract between the continuing party and the incoming party. This is the fundamental distinction between novation and assignment: assignment transfers contractual rights but not obligations, while novation transfers both rights and obligations and requires the consent of all parties — including the party with whom the original contract was made. This tripartite consent requirement is recognised by the High Court (Commercial Division) in Accra in its interpretation of the Contracts Act 1960 (Act 25) and the principles of common law received into Ghanaian law.
Novation Agreements are common in Ghana across a wide range of commercial contexts. In corporate mergers and acquisitions governed by the Companies Act 2019 (Act 992), a purchasing entity may require the novation of key commercial contracts — such as supplier agreements, distribution agreements, and technology licences — from the target company to the acquiring company as a condition of completion. In property transactions under the Land Act 2020 (Act 1036), the novation of a lease agreement transfers the tenant's position to an incoming tenant with the landlord's consent. In financial transactions, the novation of a loan facility from one lender to another with the borrower's consent discharges the original lender and substitutes the new lender.
The Office of the Registrar of Companies (ORC) maintains the register of companies incorporated under the Companies Act 2019 (Act 992) in Ghana. Where a novation involves the transfer of obligations from one Ghanaian company to another, the Novation Agreement should reference the registration numbers of both companies as issued by the ORC. For transactions involving land in Ghana, the novated agreement may need to be registered at the Lands Commission under the Land Registration Act 1962 (Act 122) and the Land Act 2020 (Act 1036) to bind third parties.
The Electronic Transactions Act 2008 (Act 772) confirms the validity of electronically signed contracts in Ghana. A Novation Agreement executed with electronic signatures through a compliant platform is legally valid and enforceable before the High Court (Commercial Division) in Accra under Section 8 of Act 772. For transactions involving real property, however, the Land Act 2020 (Act 1036) requires instruments affecting land to be executed in the prescribed form and registered with the Lands Commission.
The Ghana Revenue Authority (GRA) administers stamp duty on certain instruments under the Stamp Duty Act 2005 (Act 689). Parties to a Novation Agreement in Ghana should obtain advice from a solicitor enrolled with the Ghana Bar Association as to whether the instrument is subject to stamp duty and, if so, the applicable rate, to avoid penalties under the Stamp Duty Act 2005 (Act 689).
When Do You Need a Novation Agreement (Ghana)?
The Novation Agreement in Ghana is needed whenever one party to an existing contract wishes to be substituted by a new party, with the full discharge of the original party's obligations and the assumption of those obligations by the incoming party.
The Novation Agreement is required when a business owner in Ghana sells their business to a buyer and the buyer wishes to step into the seller's position under the seller's existing customer contracts, supplier agreements, and service agreements — a scenario that commonly arises in business acquisitions governed by the Companies Act 2019 (Act 992) and the Ghana Investment Promotion Centre Act 2013 (Act 865).
The agreement is needed when a construction contractor wishes to transfer a building contract to a subcontractor or successor contractor with the employer's consent, substituting the new contractor for the original and releasing the original contractor from further liability for completion of the works.
The Novation Agreement is required when a company in Ghana is undergoing restructuring — such as a demerger, spin-off, or group reorganisation — and wishes to transfer existing contracts from the restructured entity to a successor entity, with the continuing party's consent, to confirm contractual continuity without the novated contracts being treated as new contracts requiring fresh consideration.
The agreement is needed when a tenant under a commercial lease in Ghana wishes to transfer the tenancy to an incoming tenant with the landlord's consent, going beyond a mere assignment (which would leave the original tenant liable) to achieve a complete substitution and release under the Land Act 2020 (Act 1036) and the lease agreement.
The Novation Agreement is required when a financial institution licensed by the Bank of Ghana (BoG) transfers a loan portfolio or specific loan facility to another licensed institution, substituting the incoming lender for the outgoing lender with the borrower's consent and discharging the original lender from all obligations under the facility agreement.
The agreement is also needed when a professional services firm — such as a law firm enrolled with the Ghana Bar Association or an accounting firm registered with the Institute of Chartered Accountants Ghana (ICAG) — merges with or is acquired by another firm and wishes to novate its client retainer agreements to the merged or acquiring entity.
What to Include in Your Novation Agreement (Ghana)
The Novation Agreement (Ghana) under the Contracts Act 1960 (Act 25) must contain the following essential elements to effect a legally valid novation.
Parties: Full legal names and addresses of the three parties to the novation — the outgoing party (the party being replaced), the incoming party (the new party), and the continuing party (the party with whom the original contract was made and who consents to the substitution). Where any party is a company incorporated under the Companies Act 2019 (Act 992), the company registration number issued by the Office of the Registrar of Companies (ORC) must be stated.
Identification of the Original Contract: A precise description of the original contract being novated, including its title, date, and the names of the original parties. Where the original contract was registered with the Lands Commission or another government authority, the registration reference should be included.
Effective Date: The date on which the novation takes effect. From the effective date, the incoming party stands in the shoes of the outgoing party and assumes all rights and obligations under the original contract.
Release of Outgoing Party: An express clause confirming that the continuing party releases and discharges the outgoing party from all obligations under the original contract that arise on or after the effective date. This release is the defining characteristic of a novation and distinguishes it from a mere assignment.
Assumption by Incoming Party: An express clause by which the incoming party assumes all the rights and obligations of the outgoing party under the original contract with effect from the effective date, and agrees to be bound by the terms of the original contract as if it were an original party.
Warranties: Representations and warranties by the outgoing party that the original contract is in full force and effect, that there are no existing breaches or disputes under the original contract, and that all obligations under the original contract due for performance before the effective date have been performed.
Stamp Duty: Acknowledgment by the parties of their respective obligations regarding stamp duty under the Stamp Duty Act 2005 (Act 689), specifying which party will be responsible for the cost of stamping the Novation Agreement.
Governing Law and Dispute Resolution: Ghana law, with disputes referred to the High Court (Commercial Division) in Accra or to arbitration under the Alternative Dispute Resolution Act 2010 (Act 798).
Forms-legal.com provides this Novation Agreement template as a starting point for businesses operating in Ghana. Parties should seek advice from a solicitor enrolled with the Ghana Bar Association to confirm that all conditions precedent to novation under the original contract and under Ghanaian law have been satisfied.
Additional compliance elements for a Novation Agreement (Ghana) used in Ghana include: Under the Companies Act 2019 (Act 992), the Registrar General's Department (RGD) maintains the register of Ghanaian companies. Section 7 of the Companies Act 2019 governs company incorporation. The Ghana Revenue Authority (GRA) administers corporate tax under the Income Tax Act 2015 (Act 896). The Commercial Division of the High Court in Accra adjudicates business disputes. The Ghana Investment Promotion Centre (GIPC) regulates foreign investment under the GIPC Act 2013 (Act 865). Forms-legal.com provides this template as a starting point for Ghana-compliant documentation.
Cite this page
Reference this free template in an article, syllabus, or research note:
Forms Legal. (2026). Novation Agreement (Ghana) (Ghana) [Legal document template]. Forms Legal. https://forms-legal.com/ghana/business/contracts/novation-agreement-ghana
"Novation Agreement (Ghana) (Ghana)." Forms Legal, 2026, https://forms-legal.com/ghana/business/contracts/novation-agreement-ghana.
@misc{formslegal-novation-agreement-ghana,
author = {{Forms Legal}},
title = {Novation Agreement (Ghana) (Ghana)},
year = {2026},
howpublished = {\url{https://forms-legal.com/ghana/business/contracts/novation-agreement-ghana}},
note = {Free legal document template}
}Also available for these jurisdictions:
Frequently Asked Questions
Novation and assignment are two distinct legal mechanisms for transferring contractual positions in Ghana under the Contracts Act 1960 (Act 25). Assignment transfers contractual rights (the benefit of a contract) from the assignor to the assignee, but does not transfer the assignor's obligations — the assignor remains liable under the original contract even after the assignment. Assignment does not require the consent of the other contracting party, though notice to that party may be required under the contract. By contrast, novation transfers both rights and obligations from the outgoing party to the incoming party and completely discharges the outgoing party from further liability. Novation requires the express consent of all three parties — the outgoing party, the incoming party, and the continuing party — because the continuing party is being asked to accept a new counterparty and release the original one. The High Court (Commercial Division) in Accra has consistently recognised this distinction, and parties must use a tripartite Novation Agreement rather than a bilateral assignment deed to achieve a complete substitution and release under the Contracts Act 1960 (Act 25).
Whether a Novation Agreement needs to be registered in Ghana depends on the nature of the underlying contract and the assets involved. For Novation Agreements involving land in Ghana — such as the novation of a lease agreement or a land sale contract — registration at the Lands Commission under the Land Registration Act 1962 (Act 122) and the Land Act 2020 (Act 1036) is required to create a valid legal interest in land and to bind third parties. For Novation Agreements involving company contracts — such as service agreements, supplier contracts, or loan facilities — there is no general registration requirement under the Companies Act 2019 (Act 992) or the Contracts Act 1960 (Act 25), although the novation should be notified to any relevant government authority, financial institution, or regulatory body (such as the Bank of Ghana, the Securities and Exchange Commission, or the Ghana Revenue Authority) that is a party to or has an interest in the original contract. The Stamp Duty Act 2005 (Act 689) may require the Novation Agreement to be stamped before it can be relied upon as evidence in Ghanaian courts.
Yes — because novation requires the consent of all three parties, the continuing party in Ghana is entirely free to refuse to consent to the novation. Unlike assignment, where the assignor can in many cases transfer contractual rights without the other party's consent (subject to contractual anti-assignment clauses), novation cannot be effected without the continuing party's agreement. A continuing party in Ghana may refuse novation for legitimate commercial reasons — for example, if the incoming party does not have the same financial standing, expertise, or regulatory status as the outgoing party. Where the original contract contains an express novation provision or a change of control clause — as is common in commercial contracts governed by the Contracts Act 1960 (Act 25) and in regulated contracts approved by the Bank of Ghana (BoG), the Securities and Exchange Commission (SEC Ghana), or the Ghana Investment Promotion Centre (GIPC) — the outgoing party may be obliged to obtain the continuing party's consent before completing any corporate transaction that triggers a novation.
The Novation Agreement in Ghana should expressly address the treatment of ongoing disputes or pre-existing claims under the original contract. As a general rule, novation under the Contracts Act 1960 (Act 25) releases the outgoing party only from obligations that arise on or after the effective date of the novation. Obligations that accrued before the effective date — such as unpaid invoices, unresolved warranty claims, or pending litigation — remain the responsibility of the outgoing party unless the Novation Agreement expressly transfers those pre-existing liabilities to the incoming party. Parties should therefore include a clear clause in the Novation Agreement specifying whether the incoming party assumes pre-novation liabilities and, if so, on what terms. Any ongoing arbitration under the Alternative Dispute Resolution Act 2010 (Act 798) to which the outgoing party is a party does not automatically bind the incoming party — the incoming party must formally be substituted as a party to the arbitration with the agreement of all parties and the Ghana Arbitration Centre.
Stamp duty may be payable on a Novation Agreement in Ghana under the Stamp Duty Act 2005 (Act 689), depending on the nature and value of the transaction. The Stamp Duty Act 2005 (Act 689) imposes ad valorem stamp duty on instruments that transfer property, create obligations, or establish legal rights, at rates that vary according to the type of instrument and the value involved. The Ghana Revenue Authority (GRA) administers stamp duty and publishes the applicable rates. A Novation Agreement that substitutes a party to a commercial services contract may attract a nominal fixed duty. A Novation Agreement that substitutes a party to a land lease agreement or mortgage may attract a higher ad valorem duty by reference to the value of the land or the loan amount. An unstamped instrument is inadmissible as evidence in Ghanaian court proceedings under Section 55 of the Stamp Duty Act 2005 (Act 689) unless the deficiency is rectified by payment of the outstanding duty plus applicable penalties. Parties should obtain advice from the GRA or from a solicitor enrolled with the Ghana Bar Association before executing the Novation Agreement.
A Novation Agreement in Ghana requires consideration to be legally binding under the Contracts Act 1960 (Act 25). In a novation, the consideration flows between all three parties: the continuing party's agreement to release the outgoing party is consideration moving from the continuing party; the outgoing party's transfer of its rights and obligations to the incoming party is consideration moving from the outgoing party; and the incoming party's assumption of the outgoing party's obligations is consideration moving from the incoming party. Ghanaian courts applying the Contracts Act 1960 (Act 25) have consistently held that the mutual exchange of rights and obligations in a novation constitutes sufficient consideration for all three bilateral relationships created by the tripartite agreement. Where the Novation Agreement is expressed as a deed under seal, consideration is not required as a matter of Ghanaian law, because a deed is binding without consideration under the rules of formal instruments received from English law into the Ghanaian legal system.
This template is provided for informational purposes only and does not constitute legal advice. Laws vary by jurisdiction and change over time. Consult a qualified attorney for advice specific to your situation.Full disclaimer
Found an error? Let us knowRelated Documents
You may also find these documents useful:
Assignment of Contract (Ghana)
An Assignment of Contract for Ghana transferring the rights and obligations of an existing contract from the assignor to the assignee under the Contracts Act 1960 (Act 25), with notice to the counterparty, consent provisions, and governing law.
Notice of Breach of Contract (Ghana)
A formal Notice of Breach of Contract for Ghana, issued under the Contracts Act 1960 (Act 25) s.62 to notify a contracting party of a material breach and demand remedy or cure within a specified period.
Debt Settlement Agreement (Ghana)
A Debt Settlement Agreement for Ghana recording the full and final settlement of an outstanding debt obligation under the Contracts Act 1960 (Act 25), section 1, in exchange for a lump-sum payment.
Partnership Agreement (Ghana)
A Partnership Agreement for Ghana compliant with the Incorporated Private Partnerships Act 1962 (Act 152), setting out partner contributions, profit sharing, management, and dissolution at the Registrar General's Department.
Deed of Assignment (Ghana)
A Deed of Assignment for Ghana formally transferring rights, interests, or benefits under a contract or property from an assignor to an assignee under the Contracts Act 1960 (Act 25), section 1.