How to Set Off Agreements
A setoff agreement often occurs during civil litigation in which the defendant files a counterclaim as part of his defense in an attempt to reduce any money owed the plaintiff. Sometimes referred to as an offset, a setoff requires the existence of a cross-claim, as defined by two express conditions: the basis for the setoff must exist as a wholly separate claim from the plaintiff's, and it must exist as a valid claim that the defendant could bring as a separate suit.
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Instructions
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Civil Procedure
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Respond to the complaint issued by the plaintiff by filing an answer. An answer might contain denials, admissions affirmative defenses and counterclaims. A counterclaim will introduce the setoff agreement.
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Organize all paperwork necessary to validate the setoff. These papers should prove that the plaintiff owes the defendant some amount of money from another agreement.
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Move forward with the setoff agreement if such an agreement is noted in the answer as amenable to the plaintiff.
Develop the Setoff Agreement
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Decide on the format of the agreement. Depending on the specifics and type of setoff, this can be done two ways: by purchasing and completing a setoff agreement template, found on various legal forms websites; or by developing a form more specific to the current litigation.
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Ensure the agreement encompasses all required elements and that the title reflects the type of agreement.
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Add the date of the agreement, usually formatted as: "This agreement made effective [date] between [defendant] of [address] and [plaintiff] of [address]."
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Complete the "whereas" section. This section should list who owes whom what and why, ultimately arriving at the final amount of the setoff. The last statement of this section should reflect the parties' agreement to the setoff.
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Add a synopsis of what the parties have agreed to, beginning with a declaration that all facts presented by the parties are accurate and truthful.
Amend the Original Complaint
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Sign the agreed upon document. Both parties must sign the document in front of a third party, who will then sign as a witness.
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Amend the original complaint to reflect the parties' agreement and new terms.
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File with the amended complaint with the trial court clerk.
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Tips & Warnings
Always consult an attorney during litigation.
Contracting parties can agree to include a setoff provision within the original contract and utilize such a provision without litigation.
References
Resources
- Photo Credit signing a contract image by William Berry from Fotolia.com
