Also known as: set-off right · set off right · right of setoff · setoff · set-off · offset right
Written by attorneys — see sources below.
A right by which one party may deduct the amount of a reciprocal claim from the sum it owes another. The deduction occurs in judicial proceedings or under contract and reduces the net amount due without separate litigation.
Stella Shapiro sued Spectrum Financial in federal court claiming $90,000 in damages. The jury awarded her only $45,000 after offsets. The district court denied costs to Stella and imposed costs on her because the final recovery fell below the jurisdictional amount when computed without regard to setoff.
Sasha Stone sued Skyline Construction for breach of a supply contract. Skyline answered by asserting a setoff for defective goods delivered in a prior shipment. The court treated the setoff as part of the judicial proceeding under the UCC definition of action.
The recovery is computed without regard to any setoff or counterclaim. If the final judgment falls below $75,000 the court may deny costs to the plaintiff and impose costs on the plaintiff.
Supporting sources
Yes. The UCC defines action in the sense of a judicial proceeding to include set-off along with recoupment, counterclaim, and suit in equity.
Supporting sources