Novation, Variation and Rescission - A Question of Intention?

Corporate Rescue and Insolvency, Vol. 1, No. 95, 2008

6 Pages Posted: 7 Jul 2008

Date Written: July 6, 2008

Abstract

Restructuring often requires refinancing which in turn requires amendments to existing agreements, such as amending the definition of 'secured liabilities' in a debenture and extending a loan facility's maturity date. The legal effect of these amendments gives rise to a common question: whether the amendments are a mere variation of the existing agreements or a rescission of the existing agreements and entry into new ones. The answer to this question could determine a host of issues, such as the statutory requirements to register charges, the discharge of guarantees and tax reliefs. Recent case-law has correctly shown that while the variation/rescission distinction depends on the intention of the parties, intention is not the sole determining factor. The answer to the variation/rescission question has to be context-sensitive.

Keywords: Novation, variation of contract, contractual amendment, rescission

JEL Classification: K10, K12, K19, K20, K29, K30

Suggested Citation

Ho, Look Chan, Novation, Variation and Rescission - A Question of Intention? (July 6, 2008). Corporate Rescue and Insolvency, Vol. 1, No. 95, 2008, Available at SSRN: https://ssrn.com/abstract=1156084

Look Chan Ho (Contact Author)

Des Voeux Chambers ( email )

38/F Gloucester Tower
The Landmark
Central
Hong Kong
+852 2526 3071 (Phone)
+852 2810 5287 (Fax)

Do you have negative results from your research you’d like to share?

Paper statistics

Downloads
1,080
Abstract Views
6,062
Rank
37,666
PlumX Metrics