Agreement on offset of mutual claims - sample and nuances

If the debtor owes you money and you owe him, both obligations can be terminated by offset.

Set-off is one of the ways to terminate obligations in civil law.

In accordance with Article 410 of the Civil Code of the Russian Federation, a statement from one party is sufficient for offset. At the same time, this article of the Civil Code does not contain a prohibition on the conclusion of a bilateral agreement on the termination of mutual obligations (offset), which is more preferable and expedient for the purpose of avoiding any future disputes between the parties.

In addition, a set-off agreement, unlike a unilateral statement of set-off, gives the parties the opportunity to terminate heterogeneous obligations, as well as obligations that have expired (see more on this below).

Thus, we can distinguish offset as a unilateral transaction made according to the rules of Art. Art. 410 – 411 of the Civil Code of the Russian Federation (offset in the narrow sense) and contractual offset (offset in the broad sense), carried out without restrictions provided for by the mentioned articles of the Civil Code of the Russian Federation, but at the same time also pursuing the goal of reducing counter obligations.

Cases of inadmissibility of offset . It should be borne in mind that neither contractual nor unilateral offset of claims for compensation for harm caused to life or health, for lifelong maintenance and for the collection of alimony is unacceptable due to their social significance (see more about this below).

Features of the test . The peculiarity of offset as a basis for termination of obligations is that it entails the termination of two obligations at once - the main and the counter. In this case, both obligations are terminated if they are equal in size. If counter-obligations are unequal after offset, the larger obligation continues to exist to the extent that it exceeds the smaller claim declared for offset.

Definition of “credit”

Defining the concept of offset causes difficulties in theory. As a rule, the definition of credit is replaced by its description and does not contain all the characteristics.

Offset is the mutual repayment of equal amounts of payment obligations of two or more legal entities and individuals. (Dictionary of business terms. Akademik.ru. 2001).

Offset is the repayment of mutual obligations, payments of two or more legal entities and individuals within equal amounts, amounts of mutual debt. (Raizberg B.A., Lozovsky L.Sh., Starodubtseva E.B. “Modern economic dictionary. - 6th ed., revised and supplemented. - M.” (INFRA-M, 2011))

Offset is the repayment of one obligation through another, counter (debiti et crediti inter se contributio - definition of the Roman lawyer Modestine). The assumption of such repayment is justified by the elementary consideration that independent collection of counter-obligations would only lead to unnecessary waste of time, would initiate unnecessary processes and would impose on the debtor, without any benefit, the burden of finding and giving money or other things, in order to again then receive them back from creditor. (Brockhaus and Efron. Brockhaus and Efron, encyclopedic dictionary. 2012).

Offsetting a counterclaim is the repayment of equal amounts of mutual payment obligations of two or more legal entities and individuals. It is carried out in order to reduce mutual debt, speed up settlements and achieve savings in means of payment. As a rule, payments that are already due are counted. (Dictionary of Economic Terms. 2012).

Sample agreement and statement of offset

Agreement on set-off of counterclaims of the same type. Sample. In order to partially terminate obligations, the parties offset similar counterclaims. As a result of the offset, the debt of one of the parties is repaid in full, the other party undertakes to repay the debt within the prescribed period.

Application for offset of similar counterclaims. Sample. The Company declares a partial offset of the amounts of counterclaims of the same type that have become due. After the offset of mutual homogeneous claims, there is a balance of debt of the offset applicant. The debt of the other party to the applicant has been repaid in full.

Conditions for offset: counterclaims, uniformity and feasibility of offset

Article 410 of the Civil Code of the Russian Federation establishes the conditions for offset.

In order for the offset to take place, the following offset conditions must be present:

• counter requirements;
• homogeneity of requirements;
• feasibility of the applicant's claim for offset.

Occurrence of demands

Concurrence of claims means that the creditor in one obligation acts as a debtor in another.

At the same time, the applicant for offset cannot set off a claim that he has not against the addressee of the offset, but against a third party, even if the fulfillment of this obligation by the third party is entrusted to the addressee of the offset. This position was expressed in 2001 by the Presidium of the Supreme Arbitration Court of the Russian Federation:

“The debtor does not have the right to declare an offset of a counterclaim of a similar nature to a person who, by virtue of paragraph 1 of Article 313 of the Civil Code of the Russian Federation, is entrusted with the fulfillment of an obligation in favor of the debtor, since the latter does not have a counterclaim against such a person” (clause 12 of the information letter of the Presidium of the Supreme Arbitration Court of the Russian Federation dated December 29 .2001 N 65 “Review of the practice of resolving disputes related to the termination of obligations by offsetting counter-similar claims”).

However, in 2021, the Plenum of the Supreme Court changed its point of view on this issue and clarified that exceptions are allowed from the principle of identity of the subject composition of obligations terminated by offset in cases where an agreement or law allows the fulfillment of one of the offset obligations by a third party. In particular, the following is stated:

“In cases provided for by law or agreement, claims that are not counterclaims may be terminated by offset, for example, in accordance with the provisions of paragraph 4 of Article 313 of the Civil Code of the Russian Federation” (clause 11 of the Resolution of the Plenum of the Supreme Court of the Russian Federation dated June 11, 2020 N 6 “On some issues of application provisions of the Civil Code of the Russian Federation on termination of obligations")

Uniformity of requirements

Homogeneity of claims presupposes the presence in counter-obligations of requirements obliging the provision of similar items (money or other fungible things of the same kind, issue-grade securities). In practice, most often we are talking about offsetting funds.

For example, if the parties are obliged to transfer funds to each other for goods supplied by one party and work performed by the other party, then there are conditions for offsetting these claims, since the subject of the obligations of the parties is the same - money.

It should be noted that claims will not be homogeneous if a claim denominated in a foreign currency is subject to execution in that foreign currency, and a counterclaim is subject to execution in a different currency.

Concurrence, homogeneity of obligations and the onset of the deadline for their fulfillment as conditions for unilateral set-off must exist at the time the party makes the statement of set-off. At the same time, it should be taken into account that the counterclaims of the parties may be heterogeneous at the time of their occurrence; homogeneity matters at the time of the statement of offset. An example is given in paragraph 10 of the Resolution of the Supreme Court of the Russian Federation No. 6:

“For example, the counterclaims of the parties may at the time of their occurrence be heterogeneous (a demand for the transfer of a thing and a demand for the return of the loan amount), but by the time the offset is applied for, the counterclaims of the parties will already be homogeneous (a claim for compensation for damages for violation of the obligation to transfer a thing and demand for repayment of the loan amount).

Criterion for homogeneity of requirements. “For the purpose of applying Article 410 of the Civil Code of the Russian Federation, the objects of active and passive requirements must be homogeneous, that is, the parties, after the offset has been carried out, must be in the same position as if both obligations had been terminated by fulfillment. Article 410 of the Civil Code of the Russian Federation allows, among other things, the offset of active and passive claims that arose from different grounds. The homogeneity criterion is met when offsetting a claim for payment of the principal debt (for example, the purchase price under a sales contract) against a claim for payment of a penalty, interest or compensation for losses (for example, due to delay in performance of work under a contract)” (clause 12 Resolution of the Supreme Court of the Russian Federation No. 6).

For the concepts of active and passive requirement, see below.

Examples of claims eligible for offset . Settlement claims must be capable of being offset against each other. In this case, both the nature of the requirement and the reasons for their occurrence are indifferent. Accordingly, the following can be credited:

• the contractor’s demands for payment for work performed and the demands of the guarantor who fulfilled the monetary obligation (clause 7 of the information letter of the Supreme Arbitration Court of the Russian Federation No. 65);
• claims on a bill of exchange and monetary claims arising from general civil contracts, in particular, a loan agreement (clause 26 of the Resolution of the Plenums of the Armed Forces of the Russian Federation and the Supreme Arbitration Court of the Russian Federation No. 33/14).
• contractual and non-contractual monetary claims (restitutionary - return by a party of what was received under an invalid transaction - Article 167 of the Civil Code of the Russian Federation; or conditional claim - Chapter 60 of the Civil Code of the Russian Federation).
• claims for payment of principal versus claims for liquidated damages.

Offsetting in the last two cases is carried out by the applicant of offset at his own risk and does not prevent the addressee of offset, who does not agree with the amount of the claim in respect of which the offset was made, from filing a claim against the applicant of offset for the recovery of the amount in respect of which the offset was made unlawfully, justifying the illegality offset in full (for example, with reference to exemption from liability under Article 401 of the Civil Code of the Russian Federation) or in part (for example, with reference to the fault of the creditor under Article 404 of the Civil Code of the Russian Federation or the disproportionality of the penalty under Article 333 of the Civil Code of the Russian Federation).

Thus, in the Resolution of the Presidium of the Supreme Arbitration Court of the Russian Federation dated 02/07/2012 N 12990/11 in case N A40-16725/2010-41-134, A40-29780/2010-49-263 the following was stated:

“The indisputability of the claims being set off and the absence of objections from the parties regarding both the existence and the amount of claims are not defined by the Civil Code as conditions for set-off. Consequently, the existence of a dispute in relation to one of the offset claims does not prevent the filing of an application for offset, provided that the obligation to terminate which the offset claim is aimed at does not initiate court proceedings at the time of the application for offset.”

Offsetting heterogeneous obligations is also possible, but only by agreement of the parties. In paragraph 4 of the Resolution of the Plenum of the Supreme Arbitration Court of the Russian Federation dated March 14, 2014 N 16 “On freedom of contract and its limits” it is stated that “the norms of Article 410 of the Civil Code of the Russian Federation, establishing the prerequisites for the termination of an obligation by a unilateral statement of offset, do not mean a prohibition of the agreement of the contracting parties on the termination of heterogeneous obligations or obligations with unfulfilled deadlines, etc.”

Feasibility of offset. The deadline for fulfilling the requirements has arrived

Feasibility of the applicant's claim for offset. For offset purposes, claims must be enforceable, which presupposes their existence and validity. Offsetting invalid or terminated (by execution, compensation or other circumstances) claims is not permitted.

The ability of requirements to be fulfilled also presupposes the occurrence of the deadline for their fulfillment.

Article 410 of the Civil Code of the Russian Federation indicates that the claim of the applicant for offset can be used for offset only in cases where such a requirement has reached the deadline for execution, or the deadline for execution is not specified or is determined by the moment of demand.

Offsetting a counterclaim that is not due

Offsetting a counterclaim of the same type, the deadline for which has not arrived, is allowed, but only in cases provided for by law (Article 410 of the Civil Code of the Russian Federation). It can be assumed that this refers to situations where the applicant for offset by force of law has the right to demand early execution (for example, Articles 811, 813, 814 of the Civil Code of the Russian Federation).

In fact, by virtue of the rule on freedom of contract, the parties can establish in their agreement the possibility of offsetting similar claims, including those that have not yet become due.

The concepts of “active” and “passive” requirements in the 2021 Resolution of the Supreme Court of the Russian Federation

Resolution of the Plenum of the Supreme Court of the Russian Federation dated June 11, 2020 N 6 “On some issues of application of the provisions of the Civil Code of the Russian Federation on the termination of obligations”) introduces the concepts of “active” and “passive” claims, terminated by offset:

• active claim - the claim of the offset applicant;
• passive claim - a claim against which an active claim is counted.

In paragraph 13 of the Resolution of the Plenum of the Armed Forces of the Russian Federation No. 6, it is explained that only a claim whose deadline has come, or whose deadline is not specified or is determined by the moment of demand can be terminated by offset, applies only to an active claim. In particular, the following is stated:

“For offset by virtue of Article 410 of the Civil Code of the Russian Federation, it is necessary that the active demand has a deadline for execution, except for cases where such a period is not specified or is determined by the moment of demand.

Within the meaning of Articles 410, 315 of the Civil Code of the Russian Federation, the deadline for fulfillment of a passive claim is not necessary for offset if it can be fulfilled ahead of schedule in accordance with the law or contract.

If a person received an application for set-off from its counterparty before the deadline for the execution of a passive claim in the absence of conditions for its early execution or before the deadline for the execution of an active claim, then after the relevant deadlines have arrived, the set-off is considered to have taken place at the moment when the obligations became capable of set-off, that is the conditions established by law for offset have occurred. If the deadline for fulfillment of an active claim has arrived, but there are no conditions for early execution of a passive claim, then the debtor under the active claim has the right to fulfill his obligation.”

This clarification applies only to cases of offset at the request of one of the parties of counter-obligations. An offset agreement may terminate obligations even if the deadline for fulfillment of both of them has not arrived.

Example of offsetting an active claim : Mars LLC is a debtor to Grand LLC under a work contract, the payment deadline for which was June 25, 2020. Grand LLC, at the same time, is a debtor to Mars LLC under the purchase and sale agreement, the payment deadline for which was 08/01/2020.

On July 10, 2020, Grand LLC sends to Mars LLC a notice of offsetting the debt of Grand LLC to Mars LLC for payment for work performed under a contract with a payment deadline of 08/01/2020.

That is, at the time of sending the notice of offset of counterclaims, the deadline for fulfilling the obligations of Mars LLC to Grand LLC (active obligation) came on June 25, 2020, and the deadline for fulfilling the obligation of Grand LLC to Mars LLC (passive obligation) – no (01.08.2020). The offset is legal, since only the arrival of the deadline for fulfilling the active obligation matters.

If a notice of offset were sent by Mars LLC to Grand LLC, then offset in this situation is unacceptable, since in this case an obligation that is not yet capable of offset becomes active.

Moment of termination of obligations by offset

Please note that the deadline for fulfilling obligations terminated by offset is not associated with the date of sending or receiving a notice of offset, but with the moment the deadline for fulfilling such obligations occurs:

“For example, if the deadline for fulfillment of active and passive claims has come before the application for offset, then the obligations are considered terminated by offset from the moment the deadline for fulfillment of the obligation (or the possibility of early execution of a passive obligation) occurs, which came later, regardless of the day the application for offset was received” (p. 15 Resolution of the Supreme Court of the Russian Federation No. 6).

Filing a claim in court on a claim terminated by offset

The fact that a party to the obligation subsequently files a claim in court on a claim terminated by offset does not invalidate the offset. This was indicated by the Plenum of the RF Armed Forces in paragraph 19 of Resolution No. 6:

“If the obligations were terminated by set-off, but one of the parties filed a claim in court for the fulfillment of the terminated obligation or for the recovery of damages or other sanctions in connection with improper performance or non-fulfillment of the obligation, the defendant has the right to declare the set-off in an objection to the claim.”

The Supreme Court of the Russian Federation allowed offset of judicial acts that entered into force without initiating enforcement proceedings

Paragraph 20 of the Resolution of the Plenum of the Armed Forces of the Russian Federation No. 6 contains an explanation that the offset of claims is permissible even after the entry into force of judicial acts confirming the existence and size of the relevant obligations of the parties, but without initiating enforcement proceedings on one or both judicial acts, as well as after the entry into force of a judicial act on one claim and in the absence of objections from the debtor on another claim.

The RF Supreme Court allowed the approval of an “automatic” offset by agreement of the parties

Paragraph 21 of the Resolution of the Plenum of the Supreme Court of the Russian Federation No. 6 contains an explanation that the parties have the right to agree on a procedure for terminating their counterclaims that differs from that provided for in Article 410 of the Civil Code of the Russian Federation, for example, by establishing their automatic termination, which does not require a statement from one of the parties, or by stipulating that setting off through a unilateral expression of will is impossible and obligations can be terminated if there is an expression of will of all parties to the agreement, that is, by agreement between them (Article 411 of the Civil Code of the Russian Federation).

Bilateral and multilateral offsets

Settlement operations can be either bilateral or multilateral. Bilateral offsets are carried out by agreement of the parties or at the request of one of them.

From Art. 410 of the Civil Code of the Russian Federation it follows that only two subjects of civil law relations can be participants in the offset of counterclaims. However, in practice, organizations quite often use multilateral offsets (with the participation of three or more parties). After all, a vicious circle of debt obligations is a fairly common phenomenon, especially in holding groups.

On the legality of conducting a multilateral offset. Actions of citizens and legal entities aimed at establishing, changing or terminating civil rights and obligations, in accordance with Art. Art. 153 and 154 of the Civil Code of the Russian Federation are recognized as transactions. They can be one-, two-, or multilateral (treaties).

According to paragraph 1 of Art. 420 of the Civil Code of the Russian Federation, a contract is an agreement between two or more persons to establish, change or terminate civil rights and obligations. And on the basis of clause 2 of Art. 421 of the Civil Code of the Russian Federation, the parties may enter into an agreement, both provided for and not provided for by law or other legal acts.

Thus, a multilateral netting agreement has the right to exist as an agreement, although not directly provided for by civil law, but at the same time not contradicting it.

Multilateral offset must necessarily be carried out in the opposite direction to the flow of the debt incurred, and for an allowable amount. The legal structure of a multilateral offset is the mutual repayment of obligations and claims of its participants; therefore, persons who are not obligated to any of the participants in the offset cannot participate in a multilateral offset. The implementation of such an offset is possible only if there is a circular debt among its participants, therefore, each of the participants in the offset is associated with other mutual claims.

A netting agreement, as a rule, is concluded when its participants intend to pay off their accounts payable at the expense of receivables, without resorting to cash settlements.

Example 4. Four organizations (Omega LLC, Vega LLC, Zeta LLC and Delta LLC) decided to offset mutual claims based on the amount of the smallest debt. Omega LLC owes RUB 700,000. LLC "Vega" Vega LLC has a debt to Zeta LLC in the amount of 650,000 rubles, and Zeta LLC owes Delta LLC 830,000 rubles. At the same time, LLC "Delta" was presented with a demand from LLC "Omega" to pay a debt in the amount of 570,000 rubles.

The offset was carried out in the following direction: from LLC "Omega" to LLC "Delta", from LLC "Delta" to LLC "Zeta", from LLC "Zeta" to LLC "Vega", from LLC "Vega" to LLC "Omega" . The offset amount is 570,000 rubles.

After the multilateral offset, Delta LLC owes Omega LLC nothing. The remaining participants in the operation still have outstanding debt:

- from Zeta LLC to Delta LLC - 260,000 rubles. (RUB 830,000 - RUB 570,000);

- Vega LLC in front of Zeta LLC - 80,000 rubles. (650,000 rub. - 570,000 rub.);

- from Omega LLC to Vega LLC - 130,000 rubles. (RUB 700,000 - RUB 570,000).

Cases of admissibility of offset under the Civil Code of the Russian Federation

Settlement of both contractual and non-contractual obligations is possible.

The possibility of offset is mentioned in the following norms of the Civil Code of the Russian Federation:

• Set-off of solidary and subsidiary obligations (Articles 325, 399 of the Civil Code of the Russian Federation)
• Bail . Offsetting claims against the pledgee (clause 3 of Article 344 of the Civil Code of the Russian Federation). Set-off against the purchase price of the pledged property of the pledgee's claims secured by the pledge (clause 4 of Article 350.2 of the Civil Code of the Russian Federation);
• Guarantee . The guarantor’s right to object to the creditor’s claim (clause 2 of Article 364 of the Civil Code of the Russian Federation);
• Deposit . Losses with offset of the deposit amount (Article 381 of the Civil Code of the Russian Federation);
• Delivery . Repayment of homogeneous obligations under several supply contracts (clause 1 of Article 522 of the Civil Code of the Russian Federation);
• Lifetime annuity . Termination of a life annuity agreement at the request of the annuity recipient and his demand to return the property with its value offset against the redemption price of the annuity (clause 2 of Article 599 of the Civil Code of the Russian Federation);
• Rent . Violation by the lessor of the obligation to carry out major repairs gives the tenant the right to carry out major repairs provided for by the contract or caused by urgent need, and to recover from the lessor the cost of repairs or to offset it against the rent (clause 1 of Article 616 of the Civil Code of the Russian Federation);
• Construction contract . If, for reasons beyond the control of the parties, work under a construction contract is suspended and the construction project is mothballed, the customer is obliged to pay the contractor in full for the work completed up to the moment of mothballing... with offset of the benefits that the contractor received or could receive as a result of the termination of work (Article 752 of the Civil Code of the Russian Federation );
• Financing against the assignment of a monetary claim . If a financial agent approaches a debtor with a demand to make a payment, the debtor has the right... to present for offset his monetary claims based on an agreement with the client... (Clause 1 of Article 832 of the Civil Code of the Russian Federation);
• Bank account . The bank's monetary claims to the client related to crediting the account and paying for the bank's services... are terminated by offset, unless otherwise provided by the bank account agreement (Article 853 of the Civil Code of the Russian Federation);
• Insurance . When determining the amount of insurance compensation to be paid... or the insured amount... the insurer has the right to set off the amount of the overdue insurance premium (clause 4 of Article 954 of the Civil Code of the Russian Federation);
• Unjust enrichment . When returning property acquired or saved unjustifiably... the acquirer has the right to demand from the victim compensation for the costs incurred for the maintenance and preservation of the property from the time from which he is obliged to return the income with offset of the benefits received by him (Article 1108 of the Civil Code of the Russian Federation).

Cases of inadmissibility of offset under the Civil Code of the Russian Federation

Cases of inadmissibility of offset are established in Article 411 of the Civil Code of the Russian Federation.

The following claims are not allowed:

• on compensation for harm caused to life or health (§ 2 of Chapter 59 of the Civil Code of the Russian Federation). Attention was also drawn to the inadmissibility of offsetting these requirements in paragraph 8 of the Resolution of the Plenum of the Supreme Court of the Russian Federation dated January 26, 2010 No. 1;
• on lifelong maintenance (§ 4 of Chapter 33 of the Civil Code of the Russian Federation);
• on the collection of alimony (section V of the Family Code of the Russian Federation);
• for which the statute of limitations has expired . In accordance with paragraph 3 of Article 199 of the Civil Code of the Russian Federation, unilateral actions aimed at exercising the right (offset, direct write-off of funds, extrajudicial foreclosure of pledged property, etc.), the statute of limitations for the protection of which has expired, are not allowed . In addition, the legal position is set out in paragraph 10 of the information letter of the Presidium of the Supreme Arbitration Court of the Russian Federation dated December 29, 2001 N 65: “an obligation cannot be terminated by offsetting a counterclaim of a similar nature if, at the request of the other party, the limitation period is subject to application to the claim and this period has expired ( paragraph two of Article 411 of the Civil Code of the Russian Federation). In this case, the party that received the application for set-off is not obliged to declare that the statute of limitations has passed to the counterparty, since the limitation period can only be applied by the court, which applies it if there is an application when considering the relevant dispute (clause 2 of Article 199 of the Civil Code of the Russian Federation).”

The Supreme Court of the Russian Federation on the consequences of the expiration of the statute of limitations on active and passive claims

Clause 18 of the Resolution of the Plenum of the Supreme Court of the Russian Federation No. 6 contains the following explanations:

“In the cases provided for in Article 411 of the Civil Code of the Russian Federation, the offset does not entail the legal consequences for which it was intended, in particular, if the offset contradicts the terms of the contract or the statute of limitations has expired on an active claim. When the statute of limitations on an active claim expires, the debtor who has received an application for set-off is not obliged to respond to it by notifying the creditor about the passage of the statute of limitations (clause 3 of Article 199 of the Civil Code of the Russian Federation). At the same time, the expiration of the limitation period for a passive claim is not an obstacle to offset.”

In other words, “if the period of the active claim has expired, the set-off is considered failed, the applicant still remains a debtor under the passive claim. In this case, the recipient of the offset is not obliged to report that the deadline has expired. If you make a statement about offsetting a long-standing passive claim, the offset will take place. In essence, the claimant will “gift” his claim to the debtor.”

Possibility of offsetting a claim for which the ID period has expired by agreement of the parties . Established in Art. 411 of the Civil Code of the Russian Federation, the restriction regarding the impossibility of offsetting claims for which the statute of limitations has expired does not apply when the parties sign an agreement on offsetting mutual claims. Specified in paragraph. 5 tbsp. 411 of the Civil Code of the Russian Federation, the restriction applies only to offsets carried out unilaterally.

When is offset unacceptable?

The list of cases of inadmissibility of offset is given in Art. 411 of the Civil Code of the Russian Federation. The following claims are not allowed:

• for compensation for harm caused to life or health;
• about lifelong maintenance;
• on the collection of alimony;
• for which the statute of limitations has expired;
• in other cases provided for by law or agreement.

The list is open and offset may be prohibited in other cases provided for by law or agreement.

For example, it is unacceptable to terminate by offsetting the monetary obligations of a debtor in respect of whom a monitoring procedure has been introduced if the order of satisfaction of creditors’ claims is violated (paragraph 6, paragraph 1, article 63 of the Federal Law of October 26, 2002 No. 127-FZ “On Insolvency (Bankruptcy).”

The parties may establish the inadmissibility of offset in the contract or enter into a corresponding agreement later. You can prohibit offset completely, or you can make the possibility of it subject to compliance with certain conditions.

Violation of the prohibition established by Art. 411 of the Civil Code, other law or agreement of the parties, entails the nullity of the application for offset (clause 2 of Article 168 of the Civil Code).

Cases of inadmissibility of offset in the laws of the Russian Federation

In addition to the grounds specified in Article 411 of the Civil Code of the Russian Federation, the prohibition of offset can be established by agreement, as well as in cases provided for by law, for example:

• Participation in shared construction . When the developer returns funds in the event of his unilateral refusal to fulfill the contract, offset of claims for payment by a participant in shared construction of a penalty (fines) ... is not allowed (clause 7 of Article 9 of Law No. 214-FZ “On Participation in Shared Construction...”).
• Bankruptcy . It is not allowed to terminate the debtor's monetary obligations by offsetting a counterclaim of a similar nature if this violates the order of satisfaction of creditors' claims established by paragraph 4 of Article 134 of the Bankruptcy Law (paragraph 6 of paragraph 1 of Article 63, Article 81 of Law No. 127-FZ “On Insolvency (Bankruptcy) )". In the event of the transfer to the acquirer, as part of the transferred property, of the rights of claim against persons who are also creditors of the bank, set-off in relation to these rights of claim is not allowed (Clause 9 of Article 189.52 of the Bankruptcy Law). Repayment of creditors' claims by concluding an agreement on the novation of an obligation, and also by offsetting claims during bankruptcy proceedings in case of bankruptcy of credit organizations is not allowed (clause 31 of Article 189.96 of the bankruptcy law). Offsetting a counterclaim of the same type is not allowed from the date of initiation of bankruptcy proceedings against one of its parties (clause 14 of the information letter Presidium of the Supreme Arbitration Court of the Russian Federation dated December 29, 2001 N 65).
• Increasing the authorized capital of LLC . As a general rule, payment of the authorized capital of a limited liability company is prohibited when increasing the authorized capital by offsetting claims against the company, since Article 19 of the Law on Limited Liability Companies states that only by decision of the general meeting of participants of the company, adopted by all participants of the company unanimously, the participants companies against their making additional contributions and (or) third parties have the right to set off monetary claims against the company against their contributions.
• Banking activities . Payment of the authorized capital of a credit organization when increasing its authorized capital by offsetting claims against the credit organization is impossible, with the exception of monetary claims for payment of declared dividends in cash (Article 11 of Law No. 395-1 on banks and banking activities).
• Contributions to compensation funds . Exemption from the obligation to pay a membership fee to the compensation fund is not permitted, including by offsetting claims (Article 18.1 of the Fundamentals of the Legislation of the Russian Federation on Notaries, Article 24.8 of the Law on Valuation Activities).

How to draw up an Act of Settlement?

The legislation does not define a strict form; it is drawn up in free form, taking into account certain requirements, in two copies for each of the parties involved. If more than two parties are involved in mutual settlements, then the number of copies must be equal to the number of participants in the act.

Each copy must contain the signatures of the managers or their substitutes of all parties involved.

If desired, managers can affix a seal (from 2021, all legal entities are exempt from the obligation to have a seal in their organization). But you need to know that many government organizations, including the Tax Service, still require certification of all documents.

In addition, the legislation establishes the presence of the following mandatory details:

• the reason for the occurrence of obligations (it is enough to indicate the details of the relevant documents);
• details of organizations that participate in the mutual settlement agreement;
• the amount of debt in digital and written terms;
• list of credit obligations that have arisen.

Copies of documents that indicate the debt has arisen must be attached to the act.

This is important to know: Exceeding the limits of necessary defense: who has the right to self-defense, article of the Criminal Code of the Russian Federation

Set-off after filing a claim against the debtor

The RF Supreme Court allowed offset after a claim was filed

Before the adoption of Resolution of the Plenum of the Supreme Court of the Russian Federation dated June 11, 2020 N 6, the position on the inadmissibility of offset after filing a claim, expressed by the Presidium of the Supreme Arbitration Court of the Russian Federation in 2001, was relevant:

“After filing a claim against the debtor, it is not allowed to terminate the obligation by offsetting a counterclaim of the same type in accordance with the provisions of Art. 410 of the Civil Code of the Russian Federation. In this case, offset can be made when considering a counterclaim (clause 1 of the information letter of the Presidium of the Supreme Arbitration Court of the Russian Federation dated December 29, 2001 N 65 “Review of the practice of resolving disputes related to the termination of obligations by offsetting counter-similar claims”; ruling of the Supreme Court of the Russian Federation dated June 9, 2015 in case No. 307-ES15-795, A13-2077/2014).

A new look at this issue is reflected in paragraph 19 of the Resolution of the Plenum of the Supreme Court of the Russian Federation No. 6, which explains that obligations can be terminated by offset after filing a claim on one of the claims. In this case, the party, at its discretion, has the right to declare a set-off both in the counterclaim and in the defense to the claim. Moreover, also after filing a claim, the defendant has the right to send the plaintiff a statement of offset and indicate in the objection to the claim that the claim for which the claim was brought is terminated by offset.

Moment of termination of the obligation when sending an application for offset

The application for set-off is a one-sided transaction. To terminate the obligation by offset, the application for offset must be received by the relevant party (clause 4 of the information letter of the Presidium of the Supreme Arbitration Court of the Russian Federation No. 65).

In accordance with Art. 165.1 of the Civil Code of the Russian Federation, legally significant messages, which should include a statement of offset, entail such consequences for this person from the moment the corresponding message is delivered to him or his representative.

The statement of set-off must be delivered to the party or be deemed to have been delivered . Clause 14 of the Resolution of the Plenum of the Armed Forces of the Russian Federation No. 6 contains the following explanations:

According to Article 410 of the Civil Code of the Russian Federation, a statement from one party is necessary and sufficient for offset. To terminate obligations, the statement of offset must be delivered to the relevant party or considered delivered according to the rules of Article 165.1 of the Civil Code of the Russian Federation.

The presence of conditions for set-off without a statement of set-off does not terminate or change the obligations of the parties. Before an application for set-off, the parties do not have the right to refuse to accept proper performance on counterclaims, and the parties also do not have the right to demand the return of performance provided before the application for set-off.

Obligations are terminated by offset not from the moment the application for offset is received, but from the moment the obligation becomes due. Clause 15 of the Resolution of the Plenum of the Supreme Court of the Russian Federation No. 6 states that “obligations are considered terminated by offset in the amount of the least of them not from the moment the application for offset is received by the relevant party, but from the moment at which the obligations become capable of offset (Article 410 of the Civil Code of the Russian Federation) . For example, if the deadline for the fulfillment of active and passive claims occurred before the statement of offset, then the obligations are considered terminated by offset from the moment the deadline for fulfillment of the obligation (or the possibility of early execution of a passive obligation), which occurred later, regardless of the day the statement of offset was received.”

The termination of the obligation is not at the time of the statement of offset . In paragraph 3 of the information letter of the Presidium of the Supreme Arbitration Court of the Russian Federation No. 65, it is explained that “obligations are considered terminated by offset from the moment the obligation becomes due for fulfillment, the due date for which came later.” It is stated that if the counterclaims are homogeneous, the deadline for their fulfillment has arrived and one of the parties has made a statement of offset, then the obligations are considered terminated at the time of the due date for the fulfillment of the obligation, the deadline for which came later, and regardless of when it was made or received statement of credit.

Refusal of perfect offset . There is also no provision for the possibility of refusing a previously completed offset. Clause 9 of the information letter of the Presidium of the Supreme Arbitration Court of the Russian Federation No. 65 states that “civil legislation does not provide for the possibility of restoring obligations lawfully and justifiably terminated by offset in the event of a party’s refusal to apply for offset.”

The essence of the test

Settlement of counterclaims should not be confused with barter.
Barter is a transaction based on the relationship of exchange. For example, you supplied the company with a batch of finished products, and they supplied you with components at the same cost. You can also exchange goods of unequal value, but with an additional payment. The exchange agreement is concluded in writing. In barter, a firm is simultaneously a seller of one product and a buyer of another.

Settlement is not a separate transaction. This is just a way of ending the obligations of two entities to each other.

Settlement is possible if there are obligations among persons who, in relation to each other, are both debtors and creditors. This is where the demands meet.

Offset makes it possible not to fulfill obligations to pay for the original contracts that gave rise to counterclaims. Settlement settlements are closed due to the fulfillment of the terms of the contract for the shipment of goods, performance of work, provision of services (Article 410 of the Civil Code of the Russian Federation).

For example, you transferred goods to a company under a supply agreement. And she, in turn, provided services under a fee-for-service agreement. You can agree to pay off your obligations to each other by offset, rather than paying with real money. For offset, a statement from one party is necessary and sufficient.

Set-off upon assignment of the right of claim

Article 412 of the Civil Code of the Russian Federation establishes the rules for offset when assigning a claim.

Based on the principle of the inadmissibility of worsening the debtor's position as a result of an assignment, the legislator grants the debtor, subject to certain conditions, the right to set off against the claim of the new creditor its claim against the former creditor.

Features of offset when assigning a claim:

• the debtor's claim for offset is not counter to the new creditor;
• the new creditor may not be aware that the debtor has the right to terminate the obligation in whole or in part by offset; the original creditor is not obliged to notify the new creditor of the debtor’s right to demand termination of the obligation by offset (if he has information about this);
• offset is carried out if the claim arose on the basis that existed at the time the debtor received the notice of assignment of the claim and the term of the claim came before its receipt or this period is not specified or is determined by the moment of demand;
• the rules of offset when assigning a claim apply to all assignments of a claim, i.e. the debtor has the right to present a claim for set-off against the last creditor.

Nullity of set-off as a unilateral transaction

If a unilateral transaction is concluded when the law, other legal act or agreement of the parties does not provide for its completion or the requirements for its completion are not met, then, as a general rule, such a transaction does not entail the legal consequences for which it was intended (clause 51 of the Resolution of the Plenum of the Supreme Court RF dated June 23, 2015 N 25 “On the application by courts of certain provisions of Section I of Part One of the Civil Code of the Russian Federation”).

Set-off as a unilateral transaction may be declared invalid by the court on the grounds provided for by civil law (clause 13 of the information letter of the Presidium of the Supreme Arbitration Court of the Russian Federation dated December 29, 2001 No. 65). Violation of the provisions established in Art. 410 of the Civil Code of the Russian Federation, the conditions for the admissibility of offset entail nullity under paragraph 2 of Article 168 of the Civil Code of the Russian Federation.

Notice of offset of mutual claims

Based on the content of Art. 410 of the Civil Code of the Russian Federation, registration of offset is possible unilaterally. A notification is sent to the second party to the obligation (counterparty). You can use any example of a notification on the website (for example, about a change in the contract). But taking into account the requirements for the content of such an agreement (below).

Important!: deliver the document in such a way that, in the event of filing a claim, you can prove the fact of receipt by the counterparty. Send by registered mail with a list of attachments and postal receipt of receipt, ask the counterparty himself (if an organization, check the authority based on the Charter or power of attorney from a legal entity) to sign the second copy of the document.