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The set-off doctrine allows a defendant in a civil lawsuit to claim compensation for money owed by the plaintiff. This originated from the need to prevent defendants from being sent to debtors’ prisons for debts they did not owe. The defendant must file a response to the court including the offset amount, and the court will hear evidence from both parties before issuing a final decision on who owes whom.
When a plaintiff files a lawsuit against a defendant for money owed by the defendant, the defendant often has affirmative defenses that can be asserted. While laws vary, many jurisdictions allow the defendant to claim compensation as one of his defenses. In essence, the term means a claim that the defendant has against the plaintiff for money that the plaintiff allegedly owes the defendant. The term comes from the idea that any amount ultimately owed by the defendant to the plaintiff is “offset” by the amount owed by the plaintiff to the defendant.
The concept of allowing the defendant in a civil suit to claim compensation originated when defendants were still being sent to debtors’ prisons for money debts. Courts began to realize that the doctrine of equity required a solution to situations where a defendant was sent to debtors’ prison despite the fact that the plaintiff in the suit actually owed the defendant money as well. At the time, civil procedure required the first lawsuit to be settled before another claim could be addressed. As a result, any claims the defendant had against the plaintiff were not brought to the court until after the original lawsuit was finished.
Under the set-off doctrine, or defence, when a defendant is named in a lawsuit, he must file a response to the court within a specified time frame. In most cases, the response must include all of the defenses the defendant puts forward to the allegations made in the complaint. If the defendant argues that the plaintiff owes the defendant money, the defendant must claim the offset amount as part of his defense when he files his response to the court.
The court will then hear evidence relating to both the plaintiff’s original claim for the money owed by the defendant and evidence relating to the amount of compensation claimed by the defendant. If the court is satisfied that both parties owe each other money, the court typically adds up the claims and issues a final decision on who owes whom. For example. if the defendant does, in fact, owe the plaintiff $10,000 US dollars (USD), but the plaintiff also owes the defendant $8,000 US dollars (USD), then the final court order would be that the defendant pay the plaintiff $2,000 US dollars (US DOLLAR).
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