What Is an Offset?
An offset — also called a setoff — is the reduction of one party's claim by a counter-claim the other party holds against it. When two parties owe each other money, an offset allows the mutual debts to be netted against one another, so that only the difference is actually paid. It prevents the unfairness of one party collecting in full while ignoring what it owes.
How Offset Works
- Two parties each owe the other a sum of money
- The smaller debt is subtracted from the larger
- Only the net balance remains owing from one party to the other
Where Offset Arises in Florida
Offset comes up in litigation, where a defendant may assert a setoff or counterclaim to reduce a plaintiff's recovery; in banking, where a bank may apply a depositor's account against a debt owed to the bank; and in contract and lease disputes, where one party seeks to deduct amounts the other owes. The right to offset can depend on the contract terms and on whether the debts are mutual and matured.
Related Terms
- Judgment — May be reduced by an offset
- Damages — What an offset reduces
- Default — A debt context where offset is asserted
Barnes Walker Litigation
Barnes Walker's litigation attorneys assert and defend setoff and counterclaim rights in Florida business and contract disputes. Request a legal inquiry for assistance.
Reviewed by the attorneys at Barnes Walker, Goethe, Shea & Robinson, PLLC