Set-off of claims - can every claim be set off?

Service

The set-off consists in the cancellation of the mutual debt up to the amount of the lower claim with retroactive effect from the moment when the claim became due. By set-off, one should understand the situation between the creditor and the debtor who conclude a mutual agreement aimed at set-off of receivables.

How is the set-off of receivables made?

The set-off may be both unilateral and reciprocal (bilateral). If we are talking about a unilateral act, it then performs the function of payment, enforcement and security and does not require the consent of the person to whom it is addressed. In the case of bilateral actions, the parties (the creditor and the debtor), under the principle of freedom to conclude and shape contracts, may freely shape the contract concluded between them. It is crucial that both parties are both creditors and debtors. The subject of such an agreement should be indicated with items of the same quality and marked with regard to the species.

Effective offsetting of receivables

The provisions of the Civil Code set out the conditions for making a set-off, which must be met jointly. So, in order to successfully set off a claim:

  1. the parties must be both creditors and debtors to each other;
  2. the subject of the deduction must be money or things of the same quality, marked as to the species;
  3. both claims must be due and may be pursued before the court - that is, the deadline for their fulfillment has already expired, so both creditor may demand from each other the performance of the benefits due to them. An attempt to set off an unmatured claim is ineffective and requires the submission of a separate declaration at a later date, after the claim is due.

Another condition for the set-off of receivables to be effective is the need to make a declaration of will in this matter. In other words, this means that despite the fulfillment of all statutory conditions for set-off, the receivables will not be redeemed against each other without a prior declaration of will. This situation has its justification, as the declaration of will is constitutive and surety is not allowed under the law. The law does not impose in any way the form of making such a declaration, however, for evidence purposes it will be most sensible to make it in writing.

Can every claim be set off?

Unfortunately, not every claim can be set off. The provisions of the Civil Code provide a catalog of non-deductible claims:

  1. non-seizure;
  2. claims for the provision of means of subsistence, e.g. alimony;
  3. claims resulting from unlawful acts, e.g. compensation, redress;
  4. claims for which set-off is excluded by special provisions.

Of course, the above catalog of exclusions applies only in the case of a statutory set-off, because (as we mentioned earlier) a contractual set-off can be freely shaped and thus, any claims can be set off.