What are the benefits of novation?
A. Both parties are allowed to walk away from the contract in the event of default.
B. In a bilateral contract, it is specified that on default, the non-defaulting party nets gains and losses with the defaulting counterparty to a single payment for all covered transactions.
C. Financial market contracts can be terminated upon an event of default prior to the bankruptcy process.
D. Obligations are amalgamated with others.
Answer:D
Novation: The extinguishment ofa party's obligation (e.g., the debt ofthe obligee) through an agreement between the old obligor, a new obligor, and the obligee to substitute the old obligor for a new one.