What are rights of set-off?

What are rights of set-off?

Setoff is an equitable right of a creditor to deduct a debt it owes to the debtor from a claim it has against the debtor arising out of a separate transaction. Recoupment differs in that the opposing claims must arise from the same transaction.

How does a set-off work in law?

In litigation, a set-off is, most simply, a credit sought by the defendant to be applied against a plaintiff’s claim. Essentially, it is an amount that the defendant claims the plaintiff owes him/her which should be subtracted from any damages claimed by the plaintiff.

Is there a common law right of set-off?

TYPES OF SET-OFF 1.6 There is no general right to set-off at common law. The three basic types of set-off which have developed are:11 • contractual set-off; set-off provided for by statute; and • equitable set-off.

What are the two types of set-off?

In the legal set off the amount which is recovered is ascertained and within the pecuniary jurisdiction of the court. In the equitable set off the amount which is recovered must be ascertained and the case is admitted at the discretion of the court. In legal set off the court fees are to be paid by the defendant.

What is a set-off in court?

Also known as offset. In civil litigation, a setoff generally allows the defendant to subtract from the amount of damages that the plaintiff claims any amount that the plaintiff owes the defendant. …

What is effect of set-off?

Effect of set-off:- In such a case, when the defendant claims set-off, he will stand in the position of the plaintiff in regard to the amount claimed by him. In such case, if the plaintiff doesn’t appear and his suit is dismissed for default, or he withdraws his suit, etc.

What are types of set-off?

There are five main types of set-off:

  • independent set-off (sometimes known as legal set-off or statutory set-off)
  • transaction set-off (also known as equitable set-off)
  • contractual set-off.
  • insolvency set-off, and.
  • banker’s set-off (sometimes known as current account set-off)

What is set-off clause?

A set-off clause is a legal clause that gives a lender the authority to seize a debtor’s deposits when they default on a loan. A set-off clause can also refer to a settlement of mutual debt between a creditor and a debtor through offsetting transaction claims.

What is a set-off in civil procedure?

If there are mutual debts between a plaintiff and a defendant, the defendant may, by way of defence, set off any debt that was owed by the plaintiff to the defendant and was due and payable at the time the defence of set off was filed.

What is set-off in CPC?

Set-off means a claim by the defendant against the plaintiff or a plea in defence available to the defendant. It is a cross-claim between the parties to the suit regarding their recovery of money. It is the destruction of the debts of which two persons are reciprocally debtors to one other.

What is a right of set-off?

A right of set-off allows a (“Party 1”) to take into account the amount owed to it by the second party (“Party 2”) against any amount owed by Party 1 to Party 2, each party must be a debtor and a creditor. Common law provides the key features that must be present for set-off to arise are;

What is a contractual set off?

Contractual set-off. Where payments are due from both parties to a transaction, the parties may agree that, instead of both parties making separate payments, the party due to make the larger payment should pay the difference between the two amounts due. For further details, see Practice notes, Set-off clauses and Set-off in finance transactions.

How can the common law provisions of set-off be enhanced?

The common law provisions of set-off can be greatly enhanced by the inclusion of a contractual right to set-off (this is discussed further below) so that set-off is applicable in a greater range of situations.

When was the defence of set off introduced in the UK?

Borrowed from the civil law doctrine of compensation,1 the English Chancery Courts adopted the equitable doctrine of set-off, which was then known asstoppage.Thecommonlawcourts in England adopted the defence of set-off in 1729 by way of statute.2 The two areas of law merged and the modern defence of set-off took shape.