Which legal concept involves the replacement of one of the parties in a contract with another?

The legal concept that involves the replacement of one of the parties in a contract with another is novation. Novation occurs when all parties agree to the substitution of a new party in place of an existing party within a contract, which effectively creates a new contractual relationship while extinguishing the original agreement between the parties involved. This means that the new party assumes the rights and obligations of the party being replaced, and the original party is released from their obligations once the novation is complete.

This process is particularly important in various situations, such as when a business is sold, and the new owner takes over existing contracts or when a party cannot fulfill their obligations and a new party steps in with consent from all parties involved.

The other choices, while related to contract law, do not pertain to the substitution of one party for another. Termination refers to ending a contract entirely, alteration involves changing the terms of the contract without a party change, and ratification is the approval of a previously unauthorized act or agreement. Each of these concepts serves a different function in contract law, highlighting the specific nature of novation in facilitating the transition to a new party within a contractual agreement.