Legal Definitions - assume

In legal contexts, to assume generally means to formally take on, accept, or undertake a duty, responsibility, obligation, or the terms of an agreement. It signifies a deliberate act of stepping into an existing legal relationship or commitment, thereby accepting its associated burdens and benefits.

Specifically, in bankruptcy proceedings, when a debtor or trustee decides to "assume" an executory contract (a contract where both parties still have unfulfilled obligations) or an unexpired lease, it means they choose to continue with that contract or lease, accepting all its terms and obligations, rather than rejecting it.

Here are some examples illustrating the legal meaning of "assume":

• Example 1 (Taking on a Financial Obligation): A couple, Maria and David, are purchasing a house. The seller has an existing mortgage with a favorable interest rate. As part of their purchase agreement, Maria and David agree to assume the seller's mortgage. This means they are formally taking over the responsibility for making the remaining mortgage payments and adhering to all the original terms and conditions of that loan.

  Explanation: Maria and David are undertaking the financial duty and responsibility of the mortgage that previously belonged to the seller.

• Example 2 (Taking on Contractual Duties): A large software company, Tech Solutions Inc., acquires a smaller competitor, Innovate Apps. Innovate Apps had several ongoing service contracts with clients to provide app maintenance and support. Tech Solutions Inc. decides to assume these service contracts, meaning they are now legally obligated to provide the maintenance and support services to Innovate Apps' former clients according to the original agreements.

  Explanation: Tech Solutions Inc. is taking over the specific contractual duties and obligations that Innovate Apps previously held with its clients.

• Example 3 (Bankruptcy Context): A restaurant chain files for Chapter 11 bankruptcy. The chain operates several locations under various lease agreements. The bankruptcy trustee, after evaluating the profitability of each location, decides to assume the lease for a highly successful restaurant in a prime downtown area. By doing so, the trustee commits the bankruptcy estate to continue paying rent and fulfilling all other tenant responsibilities under that specific lease, ensuring the profitable operation can continue and contribute to the reorganization efforts.

  Explanation: In this bankruptcy scenario, "assume" means the trustee is making a formal election to continue with the lease agreement, thereby taking on its ongoing responsibilities and benefits for the bankrupt company.