TPG1979 Chapter I Paragraph 21

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Set-offs may vary in size and complexity from a simple balance of two specific transactions (such as a favourable selling price for manufactured goods in return for a favourable purchase price for the raw material used in producing the goods) to an arrangement for a general settlement balancing all benefits accruing to both parties over a period. Unrelated parties would be very unlikely to consider such set-off arrangements unless the benefits could be accurately quantified in advance, the likelihood of an adequate balance ascertained and the contract made in advance. In any other circumstances, independent parties would normally prefer to allow their receipts and disbursements to flow independently of each other in the ordinary way taking any profit or loss which resulted as part of normal trading, hoping actually to benefit if, for example, market conditions change in their favour.






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