What does novation involve in the context of contracts?

Novation involves replacing an old contract with a new one, which is why this choice is the correct answer. In a novation, the original contract is extinguished, and the parties to the agreement enter into a new contract that typically involves new terms or conditions. This process often requires the consent of all parties involved, as one party's original obligations are discharged and replaced entirely with those in the new agreement.

It's important to note that while creating a completely new agreement is a component of novation, the key focus is on the replacement of the old contract; hence, the distinction in the answer choice. Terminating a current contract and modifying a section of a contract are different concepts altogether. Termination involves ending an existing agreement without replacement, while modification involves changes to existing terms rather than the creation of a new contract.