Assumption Agreement Template for Indonesia

An Assumption Agreement is a crucial document used when one party wishes to transfer its contractual obligations to another party under Indonesian law. This type of agreement is particularly relevant in scenarios such as corporate restructurings, mergers and acquisitions, project finance transactions, or when a party needs to exit a contractual arrangement while ensuring business continuity. The agreement must comply with Indonesian Civil Code provisions, particularly regarding novation (pembaharuan utang) under Articles 1400-1403, and must be drafted in Bahasa Indonesia with an optional English translation. The document typically includes detailed provisions about the obligations being assumed, releases, consents, and any continuing obligations. It requires careful consideration of Indonesian legal requirements for contract formation, transfer of obligations, and execution formalities, particularly when notarization is required.

1. Parties: Identifies the Original Obligor (transferring party), the Assuming Party (new obligor), and the Counterparty (obligee/creditor)

2. Background: Sets out the context of the original agreement, the obligations being assumed, and the parties' intention to transfer these obligations

3. Definitions and Interpretation: Defines key terms and establishes interpretation rules, including references to the Original Agreement

4. Assumption of Obligations: Details the specific obligations being assumed by the Assuming Party and the effective date of the assumption

5. Consent and Release: Contains the Counterparty's consent to the assumption and release of the Original Obligor from the assumed obligations

6. Representations and Warranties: Standard representations from all parties, particularly regarding authority and capacity to enter into the agreement

7. Continuing Obligations: Specifies which obligations from the Original Agreement remain in effect and how they apply to the Assuming Party

8. Language Requirements: Addresses Indonesian law requirement for agreements to be in Bahasa Indonesia, and specifies the prevailing language if bilingual

9. Governing Law and Jurisdiction: Confirms Indonesian law as governing law and specifies jurisdiction for dispute resolution

10. Execution: Formal execution blocks meeting Indonesian law requirements, including notarization provisions if required