Set-off may raise complex issues in terms of the finality of payment in the context of bankruptcy. The question arises as to how automatic set-off is. Where there is an immediate need to liquidate a fixed sum debt on either side, the position is generally straightforward. Set-off is not generally automatic unless the sums are immediately due, have the same maturity and are owed to the same beneficial owner.<\/p>\n
Difficult questions arise in relation to claims that are potentially the subject of counterclaims in proceedings. There must be a sufficient connection between the claim and the counterclaim. Where one sum is liquidated and another unliquidated, a judicial determination would be necessary in respect of the unliquidated or undetermined sum.<\/p>\n
Some countries allow set off of contingent debts while others do not. Civil wrong claims may or may not be allowed. Some states allow unliquidated sums, which need to be assessed to be set off.<\/p>\n
Parties may have expanded the scope of set-off by the terms of a contract. They could agree that a wider range of claims that may not have a direct connection are set off. They may abandon the need for a court order in cases which would otherwise require it. These are other techniques are used to contractually accelerate and enhance set-offs which would otherwise exist.<\/p>\n\n
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