The following Banking & Finance practice note provides comprehensive and up to date legal information covering:
There are five main types of set-off:
independent set-off (sometimes known as legal set-off or statutory set-off)
transaction set-off (also known as equitable set-off)
insolvency set-off, and
banker's set-off (sometimes known as current account set-off)
This Practice Note examines the characteristics of the five main types of set-off.
For information on set-off in general, see Practice Note: What is set-off and when is it available?
Independent set-off operates as a procedural defence which can be used in court proceedings. It is used to set-off reciprocal claims which (unlike Transaction set-off) are independent of each other and unconnected.
Independent set-off is sometimes described as legal set-off or statutory set-off.
The term independent set-off is usually used to encompass:
statutory set-off (also known as legal set-off)—a form of set-off available under rules carried over from 18th century legislation known as the Statutes of Set-Off, and
set-off arising by analogy with the Statutes of Set-Off (ie where all of the conditions for statutory set-off are present but one of the claims is equitable, rather than legal)
Statutory set-off was originally contained in the Insolvent Debtors Relief Act 1729 and the Debts Relief Amendment Act 1735 (known together as the Statutes of Set-Off). Both of those statutes have been repealed but their effect has been preserved by the Civil Procedure Rules (CPR 16.6) which give a defendant the right to assert
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