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What Does Setoff Mean?


Setoff or offset is a term that can be used in some legal contexts. If you have a claim against someone and they owe you money, your claim might be “offset” by the amount of money they owe you.

This means it will not go forward as a separate case because the same party owes both parties money. In this post, we’ll explore what setoff means and how it works.

What Is A Setoff?


An offset is something that is used to balance or counteract something else. Furthermore, this may be expressed as “an offset” in a financial context, where one figure is balanced by another.

It can also be referred to as a “setoff,” especially when it comes to money. The defendant does not necessarily deny the plaintiff’s original claim when he or she asks for an offset, but rather aims to reduce the amount of money owed to the plaintiff by the amount that the plaintiff owes to him or her.

To reduce damages by an amount that the defendant already paid the plaintiff, a defense to an offset may be used as a counterclaim. An extra reserve may be utilized in business to compensate for a loss.

An offset may also be used in a variety of situations outside of finance. It’s usually connected with land, pollution, building, and other physical actions.

In addition, while there is a requirement that the offset be of the same type as the thing it is set against, this is not always required. When a duty to be performed is valued in a contract, one could use it to cancel out a debt owed.

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