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In legal terms, this process is called set-off. It allows people to balance out what they owe with what they are owed, making it easier to settle debts. In many situations, set-off can be a helpful tool. For example, if someone is being sued for unpaid bills, they might claim set-off if they believe the other party owes them money for something ...
Example: when the right of set off arises, if B owes A £800,000, but A in fact owes B £200,000, B can set off that £200,000 when A claims its £800,000, and pay to A only the balance of £600,000. The maths is simple, but the more difficult area is usually the issue of determining when (in what circumstances) and if the right of set-off arises in the first place.
- What Is A Set-Off Clause?
- How A Set-Off Clause Works
- Examples of Set-Off Clauses
- Benefits of Set-Off Clauses
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 creditorand a debtor through offsetting transaction claims. This allows creditors to collect a greater amount than they usually could under bankruptcy...
Set-off clauses give the lender the right of setoff—the legal right to seize funds from the debtor or a guarantor of the debt. They are part of many lending agreements, and can be structured in various ways. Lenders may elect to include a set-off clause in the agreement to ensure that, in the event of default, they will receive a greater percentage...
A lending set-off clause is often included in a loan agreement between a borrower and the bank where they hold other assets, such as money in a checking, savings, or money market account, or a certificate of deposit. The borrower agrees to make those assets available to the lender in the case of default. If assets are held at that lender, they can ...
Set-off clauses are used for the benefit of the party at risk of a payment default. They give the creditor legal access to a debtor’s assets at either the lender's financial institution or another one where the debtor has accounts. Before signing a contract with a set-off clause, borrowers should be aware that it may result in the loss of assets th...
- Julia Kagan
Aug 6, 2019 · Where the right of set off arises, it can act as a defence to part or the whole of a claim. Example: when the right of set off arises, if B owes A £800,000, but A in fact owes B £200,000, B can set off that £200,000 when A claims its £800,000, and pay to A only the balance of £600,000. The maths is simple, but the more difficult area is ...
Aug 6, 2019 · Where the right of set off arises, it can act as a defence to part or the whole of a claim. Example: when the right of set off arises, if B owes A £800,000, but A in fact owes B £200,000, B can ...
May 29, 2024 · A set-off clause is a short clause sometimes included in a commercial contract, often found within the payments clause. It may look something like this: “You agree that we may set-off or deduct from any monies payable to you under this Agreement, any amounts which are payable by you to us (whether under this Agreement or otherwise).”.
People also ask
What is set off & how does it work?
What does set-off mean in legal documents?
What are the different types of set-offs?
What is a right of set-off?
What is a set-off clause?
What are the different types of set-off rights?
The right of offset (or set-off) is the privilege of a bank, credit union, financial institution or similar entity to recover money owed by an account holder. Often, this happens to recover outstanding debts or bank credit, such as a loan or credit card payment. In other words, the right of offset is the ability of a financial institution to ...
