Also known as: set-off rights · setoff right · set off rights · setoff · right of setoff · offset rights
Written by attorneys · grounded in primary & secondary sources — see below
A right allowing one party to deduct an amount owed by another from sums otherwise payable, thereby netting reciprocal obligations without separate collection proceedings.
Serena Soto filed a diversity suit in federal court against Summit Bank seeking over $100,000 for alleged account mismanagement. After trial the jury awarded her only $42,000. The court computed the recovery without regard to the bank's asserted setoff for unpaid loan balances and then denied Soto her costs while imposing additional costs on her.
Sierra Solutions maintained an account at Spectrum Financial containing proceeds from a loan the bank had extended. When the account holder directed a large transfer out of the account, Spectrum Financial exercised its setoff rights against the balance to recover the outstanding loan debt before honoring the transfer instruction.
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The statute directs courts to compute the plaintiff's recovery without regard to any setoff or counterclaim the defendant may be entitled to receive. This prevents a defendant from using a setoff to push an otherwise qualifying claim below the jurisdictional threshold after filing.
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Under UCC § 4-201 a collecting bank holds rights of setoff against the proceeds of an item before settlement becomes final. Those rights are subject to the owner's interest but allow the bank to apply the item against advances or other obligations owed by the customer.
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Yes. Partnership law permits the partnership to offset amounts the partner or dissociated partner owes against any distribution on that partner's account, even after assignment of the economic interest to a third party.
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The buyer must prove both that the accepted goods were nonconforming when tendered and that the nonconformity caused the claimed losses. Only then may the buyer justify a price setoff or other damages.
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…set forth in this case, but would remand to the trial court for a determination of the amount due the dealer from the buyer as a setoff due to the buyer’s use of the goods after revocation. Both the court of appeals and this court state that Swad should be entitled to such an offset against the judgment for the reasonable…