- setoff
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I
noun
counter, counterbalance, counterdebt, counterdemand, counterpoise, counterweight, debt owed, equivalent claim, money due, offset, offsetting claim, recoupment
associated concepts: counterclaim, cross-claim
II
index
indemnity
Burton's Legal Thesaurus. William C. Burton. 2006
- setoff
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A claim made by someone who allegedly owes money, that the amount should be reduced because the other person owes him or her money. This is often raised in a counterclaim filed by a defendant in a lawsuit. By claiming a setoff, the defendant does not necessarily deny the plaintiff's original demand, but seeks to reduce the amount of money owed to the plaintiff by the amount that the plaintiff owes to the defendant.Category: Representing Yourself in CourtCategory: Small Claims Court & Lawsuits
Nolo’s Plain-English Law Dictionary. Gerald N. Hill, Kathleen Thompson Hill. 2009.
- setoff
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Where a debtor has a cross-claim against a creditor, to the reduction or extinguishment of the creditor's claim by the amount of his cross-claim. There are four types of set-off (the first three of which may be extended by contract):• Legal set-off. This can only be resorted to as a defence to a court action and is available where the two claims are liquidated or ascertainable with certainty and are both due and payable at the commencement of the action. The two claims do not have to arise from the same transaction or closely connected transactions. (In sale agreements, a set-off provision may, for example, set off claims under the warranties (warranty) against claims for deferred consideration).• Equitable set-off. This is available to a debtor outside the context of litigation where his cross-claim arises from the same transaction (or a closely related transaction) as the debt owed. Either and probably both of the claims may be for an unliquidated sum. A debtor can simply deduct the amount of his mutual cross-claim from the debt he owes and tender the balance of the debt (if any) to the creditor. However, the sums in question must be due and payable or, in the case of unliquidated damages, must be a reasonable assessment of the loss made in good faith.• Banker's set-off. This arises in a situation where a customer has more than one account with his bank, at least one of which is in debit and one of which is in credit. It is also known as the right to combine accounts. It is arguably of wider commercial application and could be available in any situation where one party has two or more accounts with another. A debtor can only invoke banker's set-off if the two accounts are current or running accounts. This remedy can be automatically exercised without formality.• Insolvency set-off. The rules of insolvency set-off are mandatory and may not be varied by contract. Where a creditor proves in a liquidation or bankruptcy, an account must be taken of the mutual dealings between the creditor and either the company in liquidation or the bankrupt and the sums due from one party must be set off against the sums due from the other, except that sums due from the insolvent shall not be taken into account if the other party had notice at the time they became due of either a resolution or petition to wind-up (if a company), or of a pending bankruptcy petition (if a natural person). All claims, including future, contingent and unliquidated sums, must be brought into account.+ setoff / set-offUSAsetoff, Also known as set-off.In the context of bankruptcy, a creditor's right under the Bankruptcy Code to apply a debt owing to it by the debtor against a debt it owes to the debtor, if the parties owe each other mutual prepetition debts arising from different transactions. Unlike recoupment, a creditor's right of setoff is subject to the automatic stay. If the creditor can obtain relief from the automatic stay, it may apply the debt owed to it by the debtor to reduce the amount it owes the debtor. The creditor may be paid in full before other creditors to the extent of its right to setoff.Common law and state statutes also grant limited rights of set-off as self-help remedies for debtors (for more information see Practice Note, Set-off Rights (www.practicallaw.com/3-381-7653)).Related links
Practical Law Dictionary. Glossary of UK, US and international legal terms. www.practicallaw.com. 2010.
- setoff
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n. A counterclaim against the plaintiff by the defendant arising from a cause of action other than that she is being sued for; a reduction in the amount of a settlement by the amount the debtor is owed by the creditor.See also counterclaim, cross-claim.
Webster's New World Law Dictionary. Susan Ellis Wild. 2000.
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(offset)n.a claim by a defendant in a lawsuit that the plaintiff (party filing the original suit) owes the defendant money which should be subtracted from the amount of damages claimed by plaintiff. By claiming a setoff the defendant does not necessarily deny the plaintiff's original demand, but he/she claims the right to prove the plaintiff owes him/her an amount of money from some other transaction and that the amount should be deducted from the plaintiff's claim.
Law dictionary. EdwART. 2013.
