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Set-off clause: Copy, customize, and use instantly

Introduction

A set-off clause allows one party to offset or reduce amounts owed by the other party under certain conditions. This clause is typically used to balance mutual obligations or claims between two parties, preventing the need for multiple payments. It ensures that any debts or amounts due on both sides can be netted against each other, simplifying the settlement process.Below are templates for set-off clauses tailored to different scenarios. Copy, customize, and insert them into your agreement.

Standard set-off clause

This clause allows for set-off between the parties.

Each party may set off any amounts owed to it under this Agreement against any amounts it owes to the other party. The set-off shall apply to all amounts due and payable under this Agreement, and the net amount owed by one party to the other shall be payable in accordance with the terms specified herein.

Set-off for liquidated claims

This clause allows for set-off when claims are liquidated.

If a party has a liquidated claim against the other party, the party may set off the amount of that claim against any amounts owed to the other party. The set-off may only occur once the claim is finalized and determined to be due and payable.

Set-off for unliquidated claims

This clause allows for set-off even with unliquidated claims.

The party may set off amounts owed under this Agreement against any claims, whether liquidated or unliquidated, that the party holds against the other party. The set-off will be applicable once the claims are reasonably established and not in dispute.

Set-off for cross obligations

This clause allows set-off for cross obligations between the parties.

Each party agrees to apply set-off to any mutual obligations, whereby any amounts owed under this Agreement may be offset by any amounts due by the other party under separate agreements, provided that the obligations arise from related transactions and both amounts are due and payable.

Set-off following notice

This clause requires notice before set-off is applied.

A party may set off any amounts owed to it against amounts owed by it to the other party, but only after providing [X] days’ written notice to the other party of its intent to set off. The notice must specify the amount to be set off and the basis for the set-off claim.

Set-off for defaulted payments

This clause allows set-off when there is a default in payment.

If either party defaults in making a payment under this Agreement, the non-defaulting party may set off the overdue amounts against any future payments owed by the non-defaulting party to the defaulting party. The set-off may continue until the default is remedied or settled.

Set-off for claims arising from breach

This clause allows set-off for claims resulting from a breach.

If a party is in breach of any provision of this Agreement, the non-breaching party may set off any claims arising from the breach against any amounts due to the breaching party. The set-off will apply to amounts owed for damages or other liabilities incurred due to the breach.

Set-off for partial payment

This clause applies set-off to partial payments.

In the event of a partial payment, the amount paid may be used to set off any outstanding debts owed by the paying party, with priority given to amounts that are due immediately. The balance of any unpaid amounts will continue to accrue as specified in this Agreement.

Set-off for advance payments

This clause allows set-off for advance payments.

If one party makes an advance payment to the other party, any amounts owed by the receiving party under this Agreement may be set off against the advance payment. The set-off will reduce the total amount owed under this Agreement, and any excess advance will be refunded or applied to future payments.

Set-off for debt recovery

This clause allows set-off in debt recovery situations.

In the event that one party is required to recover a debt from the other party, the recovering party may set off any amounts recovered against amounts owed to the debtor under this Agreement. The set-off applies only after the debt has been successfully recovered and is substantiated by a recovery notice.

This clause applies set-off to amounts owed under related agreements.

Any amounts owed under this Agreement may be set off against amounts owed under other agreements between the parties, provided that the agreements are related to the same transaction or subject matter. Set-off shall be applied in the order of the amounts owed, with any remaining balance carried forward.

Set-off for amounts in dispute

This clause allows set-off for disputed amounts.

If there is a dispute regarding the amount owed under this Agreement, the party disputing the amount may set off the disputed amount against any amount owed to the other party, pending resolution of the dispute. Once the dispute is resolved, any balance owed will be settled as per the agreed terms.

Set-off for payment of claims

This clause applies set-off when claims are paid.

In the event that one party pays a claim on behalf of the other party under this Agreement, the paying party may set off the amount of the claim paid against any amounts owed by the other party. The set-off shall apply immediately upon payment and is subject to the conditions specified in this Agreement.

Set-off for netting of mutual debts

This clause allows for the netting of mutual debts.

The parties agree to net any mutual debts owed to one party against amounts owed to the other party, such that only the net balance is payable. Each party will calculate the amount due and notify the other party of the net amount payable.

Set-off for security interest

This clause allows set-off against security interests.

If a party holds a security interest in any assets or property of the other party, that party may set off amounts owed to it by the other party against the value of the secured assets. The set-off will be applied to reduce the outstanding debt, and the parties will agree on the value of the secured assets at the time of set-off.

Set-off for non-payment of contractual obligations

This clause allows set-off for non-payment of obligations.

If a party fails to meet its contractual obligations under this Agreement, the other party may set off any amounts owed by the defaulting party against any amounts owed under the same Agreement. The set-off will apply to amounts due immediately, and the defaulting party shall remain responsible for any remaining balance.

Set-off for overpayment

This clause applies set-off for overpayment situations.

If one party overpays any amount due under this Agreement, the overpayment may be set off against future amounts owed to the paying party. Any excess amount that cannot be applied will be refunded or credited to the paying party.

Set-off for offset of claims between affiliates

This clause allows set-off for claims between affiliates.

The parties agree that any amounts owed by one party to an affiliate of the other party may be set off against amounts owed by the affiliate to the first party. The set-off will apply across all related entities and affiliates involved in the agreement, as long as the claims are substantiated.

Set-off for tax liabilities

This clause allows set-off for tax liabilities.

In the event that one party is required to settle tax liabilities on behalf of the other party, the party paying the taxes may set off the tax payments against amounts owed to the other party under this Agreement. The set-off applies only to taxes directly related to the transactions under this Agreement.

This clause allows set-off for legal claims.

If either party is required to pay a legal claim arising out of this Agreement, the paying party may set off the amount of the claim against any outstanding sums owed to the other party. The set-off will apply once the claim has been resolved, and the funds owed will be adjusted accordingly.

Set-off for late payment penalties

This clause allows set-off for late payment penalties.

If a party is required to pay late payment penalties due to a delay caused by the other party, the amount of the penalties may be set off against amounts owed to the responsible party. The set-off will apply to reduce the outstanding debt.

Set-off for insurance claims

This clause allows set-off for insurance claims.

If one party has paid an insurance claim on behalf of the other party, the amount of the claim paid may be set off against any outstanding sums owed to the first party. The set-off will occur once the claim is settled, and the responsible party will be credited accordingly.

Set-off for mutual claims in different jurisdictions

This clause allows set-off for claims in different jurisdictions.

The parties agree to set off any mutual claims owed in different jurisdictions. Each party will determine the equivalent value in the applicable currency, and any resulting difference will be settled through the set-off process outlined in this Agreement.

Set-off for future claims

This clause allows set-off for future claims.

The parties may set off amounts owed under this Agreement against any future claims that one party may have against the other, provided that the future claim is reasonably expected and the set-off is agreed upon in writing before it is executed.

Set-off for amounts withheld due to disputes

This clause allows set-off for amounts withheld.

If a party withholds amounts due to a dispute under this Agreement, it may set off the withheld amounts against any other outstanding debts owed by the withholding party. The amount withheld will be reviewed by both parties upon resolution of the dispute.

Set-off for partial payments in installments

This clause allows set-off for installment payments.

If a party makes partial payments in installments, any overdue installments may be set off against any amounts owed by the other party. The set-off will apply until the full debt is settled, and the installment plan will be adjusted accordingly.

This clause allows set-off for service failures.

If the services provided under this Agreement are not performed in accordance with the agreed terms, the party affected may set off any claims arising from the service failures against amounts owed to the service provider under the same Agreement.

Set-off for amounts subject to refund

This clause allows set-off for refundable amounts.

If any amounts are subject to refund under this Agreement, the refund may be set off against other outstanding payments owed to the refunding party. The set-off will be executed once the refund has been processed and credited.

Set-off for advance deposits

This clause allows set-off for advance deposits.

Any advance deposits paid by one party may be set off against future payments due under this Agreement. The set-off will apply to the outstanding debt once services or products are provided, and the deposit will be credited accordingly.

Set-off for amounts disputed in good faith

This clause allows set-off for disputed amounts.

If a party disputes an amount owed under this Agreement in good faith, it may withhold the disputed amount, and such amount may be set off against other amounts owed under the Agreement until the dispute is resolved. Both parties will work in good faith to resolve the dispute promptly.

This clause allows set-off for amounts under related contracts.

Amounts owed under related contracts between the parties may be set off against each other. The parties agree to apply set-off to reduce any outstanding debts across contracts, provided the contracts are related in terms of subject matter or transaction.

Set-off for outstanding royalty payments

This clause allows set-off for royalties.

Any unpaid royalties owed by one party under this Agreement may be set off against other amounts owed to that party. The set-off will apply to the royalties once the appropriate documentation or reports have been provided to justify the amounts owed.

Set-off for environmental or regulatory fines

This clause allows set-off for fines.

If one party is required to pay environmental or regulatory fines due to the actions of the other party under this Agreement, the paying party may set off the fines against amounts owed by the other party. The set-off will apply once the fines have been paid and documented.

Set-off for amounts owed under indemnity provisions

This clause allows set-off for indemnity.

In the event one party is required to indemnify the other party under this Agreement, any indemnified amounts may be set off against payments owed by the indemnified party. The set-off will apply once the indemnification obligation has been fulfilled.

Set-off for overpayments made in error

This clause allows set-off for overpayments.

If a party makes an overpayment under this Agreement due to an error, the overpaid amount may be set off against future payments owed by the receiving party. The set-off will be applied to correct the overpayment once it is identified.

This clause allows set-off for breach of confidentiality.

If a party breaches confidentiality provisions under this Agreement, the non-breaching party may set off any damages or losses incurred as a result of the breach against amounts owed to the breaching party. The set-off will be applied after the damages have been quantified and agreed upon.

Set-off for customer refunds

This clause allows set-off for customer refunds.

If the company issues a refund to a customer for products or services covered under this Agreement, the amount refunded may be set off against payments owed to the other party. The set-off will be applied upon the issuance of the refund.

Set-off for outstanding service fees

This clause allows set-off for service fees.

If any service fees are owed to a party under this Agreement, and another party owes amounts to the first party, the service fees may be set off against the outstanding debt. This will reduce the amount payable and settle both obligations simultaneously.

Set-off for joint expenses

This clause allows set-off for joint expenses.

If both parties are responsible for joint expenses under this Agreement, the amounts owed by each party will be set off against each other. Any remaining balance after set-off will be payable according to the terms specified in the Agreement.

Set-off for advance payments on future work

This clause allows set-off for advance payments.

Any advance payments made for future work or services may be set off against amounts owed for completed work. The set-off will reduce the outstanding balance of future invoices once the work has been completed.

Set-off for excess charges

This clause allows set-off for excess charges.

If any excess charges are incurred due to actions or negligence of one party, those charges may be set off against any amounts owed to the party that incurred the excess charges. The set-off will apply once the charges have been substantiated and confirmed.

Set-off for early payment discounts

This clause allows set-off for early payment discounts.

If a party is eligible for an early payment discount under this Agreement, the discount may be set off against the amounts owed. The set-off will apply once the early payment is made and confirmed.

Set-off for late delivery penalties

This clause allows set-off for late delivery penalties.

If the delivery of goods or services is delayed beyond the agreed time, penalties may be applied and set off against amounts owed under this Agreement. The set-off will apply once the penalties have been determined and agreed upon.

Set-off for warranty claims

This clause allows set-off for warranty claims.

In the event of warranty claims related to goods or services provided under this Agreement, the amounts owed for repairs or replacements will be set off against any outstanding payments. The set-off will apply once the warranty claim has been validated.

Set-off for penalties due to non-compliance

This clause allows set-off for non-compliance penalties.

If either party is penalized for non-compliance with applicable laws, regulations, or contract terms, the penalties may be set off against amounts owed to the other party. The set-off will apply after the penalty has been paid and documented.

Set-off for overdue invoices

This clause allows set-off for overdue invoices.

If any invoices remain overdue for a specified period, the amount owed may be set off against other payments due to the overdue party. The set-off will be applied automatically after the overdue period has passed.

Set-off for disputed amounts

This clause allows set-off for disputed amounts.

If there is a dispute over any amount owed under this Agreement, the disputing party may set off the disputed amount against any payments due under the same Agreement. The set-off will remain in effect until the dispute is resolved and the final amount owed is agreed upon.

This clause allows set-off for performance deductions.

If performance deductions are applicable due to underperformance or failure to meet agreed-upon standards, the deductions will be set off against amounts owed under this Agreement. The set-off will apply once the performance issues are substantiated.

Set-off for refund claims

This clause allows set-off for refund claims.

If a party is required to refund any amounts under this Agreement, those amounts will be set off against any outstanding payments owed by the other party. The set-off will be applied once the refund claim is processed and confirmed.

Set-off for damages resulting from breach

This clause allows set-off for breach-related damages.

If either party breaches any material term of this Agreement, the damages incurred by the non-breaching party may be set off against amounts owed under this Agreement. The set-off will apply after the breach is established and the damages quantified.

Set-off for overpayments on previous transactions

This clause allows set-off for overpayments.

If one party has overpaid any amount under this Agreement on previous transactions, the overpaid amount may be set off against amounts owed on future payments. The set-off will be applied once the overpayment is confirmed and agreed upon.

Set-off for credit balances

This clause allows set-off for credit balances.

If either party has a credit balance under this Agreement due to overpayment, refunds, or adjustments, that credit balance may be set off against future amounts owed. The set-off will apply to any subsequent invoices until the credit balance is exhausted.

Set-off for interest on late payments

This clause allows set-off for interest charges.

If interest is charged on any late payments under this Agreement, the interest amount may be set off against other payments owed by the paying party. The set-off will apply once the interest has been calculated and agreed upon.

Set-off for royalties owed

This clause allows set-off for unpaid royalties.

If royalties are owed to a party under this Agreement and another party has an outstanding debt, the royalties may be set off against the debt. The set-off will be applied once the royalty amount is determined and confirmed.

Set-off for unpaid taxes

This clause allows set-off for unpaid taxes.

If one party has unpaid taxes owed due to its operations or activities under this Agreement, the taxes may be set off against any amounts owed by the other party. The set-off will apply once the unpaid tax amounts have been verified and agreed upon.

Set-off for mutual debts in different currencies

This clause allows set-off for debts in different currencies.

If the parties owe each other amounts in different currencies, the equivalent amount in one currency will be set off against the amount owed in the other currency. The exchange rate used for the set-off will be based on the rate at the time the set-off is applied.

Set-off for deferred payments

This clause allows set-off for deferred payments.

Any deferred payments under this Agreement may be set off against any other outstanding amounts owed by either party. The set-off will apply once the deferred payments become due and payable as specified in the Agreement.

Set-off for overpaid deposits

This clause allows set-off for overpaid deposits.

If a deposit is overpaid by one party under this Agreement, the overpaid amount may be set off against any future payments due to the other party. The set-off will be applied once the overpayment is confirmed and agreed upon by both parties.

Set-off for unrecovered costs

This clause allows set-off for unrecovered costs.

In the event that one party incurs costs or expenses on behalf of the other party that remain unrecovered, these costs may be set off against amounts owed to the party that incurred the costs. The set-off will apply once the costs are substantiated and agreed upon.

Set-off for damages caused by delays

This clause allows set-off for delay-related damages.

If a delay in performance results in damages, the party causing the delay may set off the value of those damages against any amounts owed to the other party. The set-off will be applied once the damages are confirmed and substantiated.

Set-off for payments due for different agreements

This clause allows set-off for payments under multiple agreements.

Amounts owed by either party under different agreements between the same parties may be set off against each other. The set-off will apply when the obligations from multiple agreements are due at the same time and both amounts are determined to be payable.

This clause allows set-off for vendor-related disputes.

In case of a dispute with a vendor that affects the performance or deliverables under this Agreement, the company may set off any amounts owed to the vendor against amounts owed by the vendor to the other party under this Agreement.

Set-off for tax or withholding obligations

This clause allows set-off for tax or withholding obligations.

If either party is required to withhold taxes or any other governmental charges on amounts due under this Agreement, those withheld amounts may be set off against other payments due under the same agreement. The set-off will apply once the withheld amounts have been substantiated and acknowledged.

Set-off for cross-claims between parties

This clause allows set-off for cross-claims.

In the event of cross-claims arising between the parties, either party may set off its claim against amounts owed by the other party under this Agreement, provided that the cross-claims are of a similar nature and both claims are due and payable.

Set-off for excess inventory or product returns

This clause allows set-off for product returns.

If one party returns products or inventory to the other party in excess of the agreed-upon returns, the value of the excess returns may be set off against any amounts owed for future orders. The set-off will apply once the returns have been confirmed and the value has been agreed upon.

This clause allows set-off for related debts.

If there are multiple debts or amounts due between the parties under related transactions, the amounts may be set off against one another. The set-off will be applied across the related debts, ensuring that only the net balance is payable.

Set-off for warranty or repair costs

This clause allows set-off for warranty-related costs.

If one party incurs costs related to the warranty or repair of goods provided under this Agreement, those costs may be set off against amounts owed by the other party. The set-off will apply once the costs have been substantiated and agreed upon.

This clause allows set-off for breach-related expenses.

In the event of a breach of contract by one party, the non-breaching party may set off the expenses incurred due to the breach against amounts owed under this Agreement. The set-off will apply once the breach is confirmed and the related expenses are documented.

Set-off for damage to assets

This clause allows set-off for asset damage.

If one party causes damage to the other party’s assets during the performance of this Agreement, the party responsible for the damage may set off the value of the damage against any amounts owed to the other party. The set-off will be applied once the damage has been assessed and agreed upon by both parties.

Set-off for unapproved changes to contract terms

This clause allows set-off for unapproved contract changes.

If one party makes changes to the terms of this Agreement without the approval of the other party, any costs or damages arising from those changes may be set off against amounts owed under this Agreement. The set-off will apply once the unapproved changes are substantiated.

Set-off for unfulfilled contract conditions

This clause allows set-off for unfulfilled conditions.

If one party fails to fulfill any of its obligations under this Agreement, the non-breaching party may set off the value of the unfulfilled condition against any amounts owed under the contract. The set-off will be applied once the breach or failure to fulfill the condition is confirmed.

Set-off for liquidated damages

This clause allows set-off for liquidated damages.

If liquidated damages are owed by one party due to a breach or failure to perform under this Agreement, the amount of liquidated damages may be set off against amounts owed by the other party. The set-off will apply once the damages have been calculated and agreed upon.

Set-off for delayed or disputed payments

This clause allows set-off for disputed payments.

If a party disputes a payment owed under this Agreement, the disputed amount may be set off against any other payments owed by the disputing party. The set-off will remain in place until the dispute is resolved and the amount owed is confirmed.

Set-off for advance payments for unfulfilled services

This clause allows set-off for advance payments.

If an advance payment is made for services under this Agreement and the services are not fulfilled as per the contract, the advance payment may be set off against future payments owed to the other party. The set-off will apply once the non-fulfillment is confirmed.

Set-off for post-delivery inspection costs

This clause allows set-off for inspection-related costs.

If one party incurs costs for post-delivery inspections of goods provided under this Agreement, those inspection costs may be set off against any outstanding amounts owed under the contract. The set-off will apply once the costs are verified and agreed upon by both parties.

Set-off for security deposit claims

This clause allows set-off for security deposit claims.

If a security deposit has been paid under this Agreement, any claims related to damages or non-compliance may be set off against the deposit. The set-off will be applied once the claims are validated and the deposit is confirmed as available for offset.

Set-off for penalty payments

This clause allows set-off for penalty payments.

In the event that a party is required to pay a penalty under this Agreement, the penalty amount may be set off against any amounts owed to the other party. The set-off will apply once the penalty is assessed and documented.

Set-off for unpaid royalties

This clause allows set-off for unpaid royalties.

If royalties are owed under this Agreement and are unpaid, the amount owed may be set off against other amounts due to the party entitled to the royalties. The set-off will apply after the royalty amounts are verified and confirmed.

Set-off for overdelivery of goods

This clause allows set-off for overdelivery.

If goods are delivered in excess of the agreed quantities, the excess goods' value may be set off against any amounts owed for the goods delivered under this Agreement. The set-off will apply once the excess delivery has been documented and verified.

Set-off for non-compliance with delivery terms

This clause allows set-off for delivery non-compliance.

If the delivery terms outlined in this Agreement are not met, the non-compliant party may set off the cost of non-compliance against amounts owed. The set-off will be applied once the failure to meet delivery terms is substantiated.

This clause allows set-off for legal defense costs.

If one party incurs legal defense costs due to the other party’s actions or breach under this Agreement, those costs may be set off against any amounts owed by the defending party. The set-off will be applied once the legal costs are confirmed.

Set-off for costs associated with force majeure

This clause allows set-off for force majeure-related costs.

In the event of a force majeure situation that causes additional costs to one party, those costs may be set off against amounts owed by the other party. The set-off will apply once the force majeure event and associated costs are substantiated.

Set-off for insurance claims

This clause allows set-off for insurance claims.

If an insurance claim is made and processed under this Agreement, the amount of the claim paid out may be set off against any amounts owed to the party receiving the insurance payment. The set-off will apply once the claim amount has been processed and received.

Set-off for late completion of work

This clause allows set-off for late completion.

If work is completed later than the agreed schedule, any penalties or reductions in payment for late completion may be set off against future payments owed under this Agreement. The set-off will apply once the delay is confirmed and penalties are calculated.

Set-off for cancellation of orders

This clause allows set-off for cancelled orders.

If an order is canceled by one party, the costs associated with the cancellation may be set off against any payments due from the canceling party. The set-off will apply once the cancellation costs are confirmed and agreed upon.

Set-off for unpaid invoices under separate agreements

This clause allows set-off for unpaid invoices across agreements.

Any unpaid invoices under separate but related agreements between the parties may be set off against amounts owed in the current agreement. The set-off will apply after verifying the amounts due under all related agreements.

Set-off for breaches of confidentiality

This clause allows set-off for confidentiality breaches.

If a breach of confidentiality occurs, the resulting costs or damages may be set off against any amounts owed to the breaching party. The set-off will apply once the breach is confirmed, and the associated costs or damages are calculated.

Set-off for claims arising from negligence

This clause allows set-off for claims resulting from negligence.

If a claim arises from one party’s negligence under this Agreement, the resulting damages may be set off against amounts owed to the negligent party. The set-off will apply once the damages are determined and substantiated.

Set-off for disputed quality of goods

This clause allows set-off for quality-related disputes.

If goods delivered under this Agreement are found to be of poor quality or non-compliant with the agreed standards, the cost to repair or replace them may be set off against amounts owed. The set-off will apply once the quality issue is confirmed and rectified.

Set-off for failure to meet service level agreements (SLAs)

This clause allows set-off for SLA non-compliance.

If the service levels agreed in the SLA are not met, any penalties or financial consequences imposed may be set off against payments owed under this Agreement. The set-off will apply once the failure to meet the SLA is confirmed and any penalties assessed.

Set-off for non-delivery of contracted services

This clause allows set-off for non-delivery of services.

If the contracted services are not delivered as agreed, the payment for those services may be set off against any other amounts owed by the non-performing party. The set-off will apply once the non-delivery is confirmed and documented.

Set-off for overpayment under the agreement

This clause allows set-off for overpayment.

In the event of an overpayment under this Agreement, the overpaid amount may be set off against any future amounts owed to the overpaid party. The set-off will apply once the overpayment is verified and confirmed.

Set-off for environmental compliance costs

This clause allows set-off for compliance costs.

If one party incurs costs to meet environmental compliance requirements that were not originally accounted for in this Agreement, those costs may be set off against any payments due from the other party. The set-off will apply once the compliance costs are substantiated and agreed upon.

Set-off for damages to property

This clause allows set-off for property damages.

If one party causes damage to property belonging to the other party, the value of the damages may be set off against any amounts owed to the responsible party under this Agreement. The set-off will apply once the damage is assessed and the value of repairs or replacement is determined.

Set-off for failure to provide required documentation

This clause allows set-off for failure to provide documentation.

If one party fails to provide the necessary documentation as required under this Agreement, the other party may set off the value of any costs incurred due to the lack of documentation against any amounts owed. The set-off will apply once the failure to provide the documentation is confirmed.

This article contains general legal information and does not contain legal advice. Cobrief is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.

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