Contractual Set Off Agreement

`The applicant was now claiming the price of the goods sold under the last of those sales contracts and the defendant attempted to attribute its counterclaim to the applicant`s rejection of the distribution contract. The Tribunal decided that the counterclaim could be clarified and that there was therefore a bellicose defence against the price claim for the goods sold.” The parties sometimes agree on a contractual right of set-off, for example. B where they have a current business relationship; on the other hand, they may accept the exclusion of rights of set-off. Also known as “Rolling Netting”, Netting by Novation includes the modification of contracts by agreement between the parties. As a result, previous rights are extinguished and replaced by new claims. In practice, it is more difficult to apply equity set-off than contractual set-off, since the claims to be imputed must be of the same nature (i.e. both contractual) and must be so closely related that it would be “manifestly unfair” [1] to impose one without taking into account the others. Finally, bin Kemi v Blackburn Chemicals Limited,8 concerns a claim for damages by the applicant for refusal of a 1994 distribution contract for the supply of a product called Dispelair. The defendant contested the existence of the agreement and, in the alternative, brought an action for damages for counterclaim by the applicant. Under the heading `Close link`, Potter LJ examined the authorities and commented as follows that contractual set-off is achieved where a right of set-off has been created by an explicit contractual agreement. The borrower undertakes to make these assets available to the lender in the event of default.

When assets are held with this lender, the lender can more easily access them to cover a defaulted payment. However, a set-off clause may also include rights to the assets of other institutions. While these assets are not easily accessible to the lender, the set-off clause gives the lender the contractual agreement to seize them when a borrower is late. The question of whether a party can try to reduce its liability for one contract by deducting that liability with debts from another contract is still alive. .