Final answer:
Novation is the substitution of a new contract for a former one. It involves replacing an existing contract with a new one, typically involving the substitution of one party or a change in the terms of the agreement.
Step-by-step explanation:
The substitution of a new contract for a former one is called novation. Novation is a legal concept in contract law that allows parties to replace an existing contract with a new one, typically involving the substitution of one party or a change in the terms of the agreement. It is a way to modify or terminate an existing contract and create a new one with the consent of all parties involved. For example, if Party A owes Party B a debt, Party A and Party B can agree to novate the contract by substituting Party B with Party C, who will assume the debt obligation.