set-off (law)

In law, a set-off is an equitable defence to the whole or to a portion of a plaintiff's claim. A setoff is the right of a debtor to balance mutual debts with a creditor. In bookkeeping terms, setoffs are also known as reconciliations. To determine a setoff, simply subtract the smaller debt from the larger. Any balance remaining due either of the parties is still owed, but the remainder of the mutual debts has been set off.