What is set-off in a contract?

Set-off clauses are written into legal agreements to protect the lender. A set-off clause allows the lender to seize assets belonging to the borrower, such as bank accounts, in the event of a default. Set-off clauses are also used by manufacturers and other sellers of goods to protect them from a default by a buyer.

What is a set-off in legal terms?

1. The right of someone who owes money to subtract from the debt any money owed in the other direction. 2. A defedant’s monetary demand against the plaintiff for some injury unrelated to the plaintiff’s claim. commercial law.

Is set-off legal in South Africa?

Even though set-off forms part of the South African common law, it can also be regulated inter partes in terms of a contract. For instance, a contract can expressly state that set-off will, or will not, apply between the parties to that contract.

What is a no set-off clause?

A Standard Clause waiving one or both parties’ setoff rights (also known as set-off or offset rights) under one or more commercial transactions.

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 the purpose of set-off?

The right of setoff is a legal right by a debtor to reduce the amount owed to a creditor by offsetting against it any amounts owed by the creditor to the debtor. For example, a bank can seize the amount in a customer’s bank account to offset the amount of an unpaid loan.

What is purpose of set-off?

When can set-off be applied?

Set-off can apply to obligations arising from contract or any other source. 1 In instances where the parties are mutually indebted to each other for the same amount, set-off will terminate the indebtedness between the parties as if the parties had performed.

What is the common law right of set-off?

Set-off is a common law right that a debtor has to net obligations it owes to a creditor off against obligations the creditor owes to it and only to pay the balance.

Is there a common law right to 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 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 are the kinds of set-off?

There are two types of set off: Legal set off. Equitable set off.

What is a set off clause in a contract?

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.

When was the set off agreement entered into?

Exhibit 10.10 – Set-Off Agreement Set-Off Agreement This Set-Off Agreement (this “Agreement”) is entered into as of February 18, 2009 by and among Lee Enterprises, Incorporated, a Delaware corporation (“Lee”), Lee Procurement Solutions Co., an Iowa corporation (“Procurement”) and Pulitzer Inc., a Delaware corporation (“Pulitzer”).

What are manufacturing set-off clauses in supplier contracts?

Supplier contracts may include manufacturing set-off clauses. Such a clause might be used in lieu of a letter of credit, as it provides the supplier access to funds in a predetermined lending contract should the buyer default.

What are the customer advantages of a set-off clause?

Although not a direct customer advantage of set-off clauses themselves, the Truth in Lending Act prohibits set-off clauses from being applied to credit card purchases. If a customer purchases a defective product, this act will protect them from having their deposits or assets seized.