Set-Off

Set-off is the right to deduct a cross-claim from a sum otherwise due, so only the net balance is paid or pursued. English law distinguishes legal set-off, available in litigation for liquidated mutual debts, from equitable set-off, available where the cross-claim is so closely connected to the claim that it would be unjust to enforce one without the other. In charterparties the rule is sharp: hire under a time charter is generally payable in full without deduction, except that equitable set-off permits the charterer to deduct for the owner’s wrongful deprivation of the vessel’s use, such as off-hire periods or short delivery of speed. Freight, by contrast, must be paid in full with no set-off for cargo damage.