Explanation of Article 74
This article addresses the concept of "novation," which is the extinguishment of an obligation by creating a new obligation in its place. The article stipulates that novation occurs in two cases:
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First: "Renewal of the debt," which is the extinguishment of a debt by creating a new debt in its place, provided that the debts are "reciprocal," "of the same type," "due for performance," and "free of dispute." For example, if a person owes another a certain amount, and the parties agree to replace this debt with another debt, in this case, the debt is renewed, the old debt is extinguished, and a new debt is created.
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Second: "Renewal of the parties," which is the extinguishment of an obligation by creating a new obligation in its place, provided there is a change in one of the parties to the obligation. For example, if a person owes another a certain amount, and the parties agree to replace the debtor with another debtor, in this case, the parties are renewed, the old obligation is extinguished, and a new obligation is created.
It should be noted that novation leads to the "extinguishment of the obligation," so no legal effect is imposed on the debts after novation.
This article is considered one of the most important articles related to novation, as it clarifies how an obligation is extinguished and the various methods of doing so.
Related To
Article 74
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The contract may include any condition acceptable to the contracting parties if it meets the terms provided for in Article 72(1) of this Law.
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If the contract includes an invalid condition, the invalidity shall be limited to such condition. However, a contracting party may demand nullification of the entire contract if, in the absence of such condition, he would not have consented to the contract.