The Deed Of Novation (Construction) is a crucial document in Hong Kong's construction and development landscape, used when there is a need to substitute one party for another in an existing construction contract. This situation commonly arises during corporate restructuring, company acquisitions, or when a contractor needs to be replaced due to performance issues or financial difficulties. The deed ensures a smooth transition by explicitly transferring all rights, obligations, and liabilities from the outgoing party to the incoming party, while preserving the continuing party's interests. Operating under Hong Kong law, particularly the Conveyancing and Property Ordinance and construction industry regulations, this document requires careful drafting to address specific aspects such as outstanding works, payments, warranties, and security arrangements. It's essential for maintaining project continuity and managing legal risks in construction projects.
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1. Parties: Identifies the three parties involved: (1) the Original Party (outgoing), (2) the New Party (incoming), and (3) the Continuing Party
2. Background: Recitals explaining the original contract, reason for novation, and intention of the parties
3. Definitions: Defines key terms including Original Contract, Novation Date, and any construction-specific terms
4. Novation: Core clause effectuating the novation, transfer of rights and obligations
5. Release of Original Party: Formal release of the outgoing party from its obligations under the Original Contract
6. Assumption by New Party: New Party's assumption of the Original Party's rights and obligations
7. Continuing Party's Consent: Continuing Party's formal consent to the novation and agreement to be bound
8. Effective Date: Specifies when the novation takes effect and any conditions precedent
9. Representations and Warranties: Each party's representations regarding their capacity and authority to enter into the deed
10. Governing Law and Jurisdiction: Specifies Hong Kong law as governing law and jurisdiction for disputes
11. Execution: Formal execution blocks meeting Hong Kong deed requirements
1. Outstanding Payments: Include when there are existing payment obligations to be addressed as part of the novation
2. Work in Progress: Include when there are ongoing construction works that need specific provisions for transition
3. Intellectual Property: Include when the construction contract involves significant IP rights or design elements
4. Security Interests: Include when there are bonds, guarantees, or other security interests to be transferred or replaced
5. Insurance: Include when specific insurance arrangements need to be addressed
6. Disputes: Include when there are existing disputes that need to be addressed or preserved
7. Confidentiality: Include when specific confidentiality obligations need to be preserved or established
1. Schedule 1 - Original Contract: Copy or details of the contract being novated
2. Schedule 2 - Outstanding Works: List of incomplete works and their status at novation date
3. Schedule 3 - Outstanding Payments: Details of any payments due or retentions held under the Original Contract
4. Schedule 4 - Relevant Notices and Correspondence: Key notices or correspondence that survive the novation
5. Schedule 5 - Transferred Security Interests: Details of any security interests being transferred
6. Appendix A - Form of Notice to Third Parties: Template notice informing other project stakeholders of the novation
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