Verrekening

Set-off is a legal concept in the law of obligations under which two parties holding mutual claims against each other may offset those claims without any actual payment being required. This mechanism is provided for in Article 6:127 of the Dutch Civil Code and requires that the claims be of the same nature, due and payable, and subsist between the same legal persons.

In practice, set-off avoids unnecessary cash flows and simplifies the settlement of contractual and commercial relationships. It is relevant in commercial disputes, billing, lease and employment relationships, and in bankruptcy proceedings, where creditors frequently rely on set-off to improve their position.

Parties may exclude or restrict the right of set-off by contract, and statutory limitations apply in certain cases (such as attachment or bankruptcy). A valid exercise of set-off produces a discharging effect for both parties.