Settlement Agreement as Novation Extinguishing Prior Obligation

A contractual obligation was deemed extinguished by the subsequent execution of a settlement agreement, which the lower court had interpreted as a novation, despite the appellant arguing that the second agreement merely confirmed the first without extinguishing the original debt. The high court upheld the lower court's interpretation, reasoning that the execution of a compromise agreement, which definitively settles the points of contention between the parties, inherently constitutes a novation that extinguishes the preceding obligation, even if the intent to novate is not explicitly stated, as the mutual intent to replace the old obligation with the new one can be inferred from the conclusive nature of the settlement.