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Setoff

1.  The right of someone who owes money to subtract from the debt any money owed in the other direction. 

2.  A defedant's monetary demand against the plaintiff for some injury unrelated to the plaintiff's claim.

Definition from Nolo’s Plain-English Law Dictionary

A claim made by someone who allegedly owes money, that the amount should be reduced because the other person owes him or her money. This is often raised in a counterclaim filed by a defendant in a lawsuit. By claiming a setoff, the defendant does not necessarily deny the plaintiff's original demand, but seeks to reduce the amount of money owed to the plaintiff by the amount that the plaintiff owes to the defendant.

Definition provided by Nolo’s Plain-English Law Dictionary.

August 19, 2010, 5:24 pm

 

1.  A homeowner hires a contractor to fix up a house.  While working on the house, the contractor mistakenly breaks a door handle.  The homeowner can subtract the cost of replacing the handle when paying the final bill.  The amount deducted is a setoff.

2.  Peter sues Denise for breach of contract, claiming $2,000 in damages.  Denise makes a counterdemand for $500, stemming from an unrelated allegation of battery by Peter.  Denise's demand for damages is a setoff.