TechSolutions Inc. and BuildIt LLC entered into a contract where TechSolutions was to provide software development services for BuildIt over two years. After one year, BuildIt desired to engage another company, DevMasters, to complete the remaining work. All three parties agreed that DevMasters would take over the remaining obligations, and BuildIt paid TechSolutions a lump sum to terminate their original agreement. Which type of discharge best describes the termination of the original contract between TechSolutions and BuildIt?
The correct answer is novation because all three parties agree to replace the original contract with a new one, effectively discharging the original obligations. Accord and satisfaction involve an agreement to settle a dispute, but do not introduce a new party. Rescission unwinds the contract without necessarily substituting another party, and release typically involves one party relinquishing claims without creating a new agreement.
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