Exclusion of set-off rights

WILSON v HOLT [2012]

In this case the Court had to decide whether the exclusion of a right of set-off in a contract satisfied the UCTA reasonableness test and whether it had been properly incorporated into the contract.

A right of set-off is effectively a self-help remedy which provides a possible defence against a contractual claim. It is the right for one contractual party to off-set a claim that it has against a claim which is brought by the other party. If a contractual claim is made, by exercising this right validly, the original claim may be reduced or extinguished entirely and it can be a very successful tool. For that reason, many contracting parties routinely try to contractually exclude or prohibit any right of set-off that might otherwise be available to the other party. However, such an exclusion will, in certain circumstances, have to satisfy the ‘reasonableness test’ under the Unfair Contract Terms Act (‘UCTA’) to be enforceable.



Points to Note:

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