Court case(1882) 7 App Cas 345

Scarf and Rogers were partners. Scarf retired and Beech joined Rogers, the firm continuing under the same name. Jardine, a customer who had dealt with the old firm, supplied goods to the new firm without notice of the change. On learning the facts he first sued Rogers and Beech, the new partners, and proved in their bankruptcy; when that yielded little, he sued Scarf, the retired partner, for the same debt.

The House of Lords held that he could not. Jardine had a choice: to treat the contract as made with the old firm (Scarf and Rogers), on the footing of apparent authority, or with the new firm (Rogers and Beech), the persons who actually received the goods. The two were alternative, not cumulative. By suing the new firm with full knowledge he had elected, and that election, once made, was final. Lord Selborne defined novation as the substitution of a new contract for an existing one, either between the same parties or between different parties, the consideration being mutually the discharge of the old contract.