Q&As

What are the rules on counterclaims and pleading set-off where a defendant counterclaims for defective goods against a claimant seeking payment for the goods supplied? When does interest run from for defective products under the Late Payment of Commercial Debts (Interest) Act 1998

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Published on LexisPSL on 06/11/2018

The following Dispute Resolution Q&A provides comprehensive and up to date legal information covering:

  • What are the rules on counterclaims and pleading set-off where a defendant counterclaims for defective goods against a claimant seeking payment for the goods supplied? When does interest run from for defective products under the Late Payment of Commercial Debts (Interest) Act 1998
  • The availability and types of set-off
  • Do you need to plead set-off specifically?
  • Interest under the Late Payment of Commercial Debts (Interest Act 1998)

In this Q&A, it has been assumed that the question refers to pleading set off in a counterclaim. Furthermore, this Q&A has focussed on when and what type of set-off may be pleaded and any impact on interest claimed under the Late Payment of Commercial Debts (Interest) Act 1998 (LPCD(I)A 1998).

The availability and types of set-off

For general guidance on setting-off see Practice Note: Types of set-off.

Types of set-off—Independent set-off and Types of set-off—Transaction set-off (also known as equitable set-off) can both be used as a defence in legal proceedings. Independent set-off is used to set-off reciprocal claims, which are independent of each other and unconnected. Transaction set-off arises when two claims are so closely connected that it would be unjust to allow one party (X) to enforce its claim without giving credit for the claim of the other party (Y) where Y has been wronged. For more information, see Practice Notes: Independent set-off and transaction set-off, Pleading set-off and Contractual set-off.

With the exception of contractual set-off, both set-off claims must be for the non-payment of money and there must be mutuality of debts. For guidance see, Practice Note: What is set-off and when is it available?

With the exception of independent (legal) set-off (see Practice Note: Independent set-off and transaction set-off), a set-off may be asserted and acted upon, such as Y

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