Set-off of receivables in debt trading


The essence of the deduction was expressed in the Civil Code (Art. 498 of the Civil Code). A surety should be understood as a situation in which both persons are both creditors and debtors for each other, and each of them has the right to set off the receivables from the other party. The effect of such set-off of claims is the cancellation of both claims up to the amount of the lower claim. The subject of the deduction can only be money or things of the same quality, marked as to the species.

Set-off of receivables - form

Set-off of receivables may take the form of a bilateral agreement, based on the principle of freedom to conclude contracts, as adopted in civil law. Therefore, the parties may shape the contract in a different way than it is contained in the Civil Code, in particular in the case of deduction of future or unmatured claims. In some cases, the set-off may take the form of a multilateral agreement, e.g. in the event of a foreclosure or recognition of a debt or a transfer of receivables.

Set-off of receivables - conditions

For a set-off to be made, certain legal conditions must be met:

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 with regard to the species;

3) both claims must be due and may be pursued before a court

It is important that the above conditions are met jointly.

Set-off of receivables - benefits

Sometimes, having a claim against a creditor may create certain financial benefits, as for the creditor of the debts, including those not classified as difficult or lost, have a lower value than the face value of the claim. Entrepreneurs very often use debt trading to increase the efficiency of their settlements.

Finally, it is worth remembering that the receivables that he wants to set off do not have to result from any legal relationship of mutual relationship - you can set off receivables, acquired by assignment or received in inheritance.