Set-off CASES
In English law, set-off is a legal mechanism allowing parties with mutual debts or claims to offset these against each other, resulting in a net balance payable.
Definition and Principles
Set-off enables simplification and efficiency in resolving mutual liabilities, ensuring fairness by allowing debts or claims to be deducted from corresponding obligations.
Common Examples
- Commercial disputes involving mutual financial obligations.
- Cross-claims arising in contractual or financial transactions.
- Insolvency scenarios where creditors offset debts.
Legal Implications
- Set-off can be contractual, statutory, or equitable, each with specific rules and requirements.
- Effective set-off may extinguish or reduce debts without separate payments.
Practical Importance
Understanding set-off assists parties in efficient debt management, reduces litigation complexity, and supports financial clarity in commercial transactions.
Home » Set-off
A buyer withheld the final payment for goods, claiming a set-off for the seller's breach of contract. The contract contained a clause prohibiting any set-off. The Court of Appeal held this 'no set-off' clause was unreasonable and therefore void under the Unfair Contract Terms Act 1977. Facts The plaintiff (respondent), Stewart Gill Ltd, agreed to supply and install an overhead conveyor system for the defendant (appellant), Horatio Myer & Co Ltd. The contract was based on the plaintiff’s standard terms of business. The purchase price was to be paid in instalments, with the final 10% due 30 days after completion.
