It is not uncommon for a debtor to file a lawsuit for the payment of an amount, while failing to disclose that they themselves owe money to the defendant. The law allows the defendant to assert their own claim in the court proceedings. This can be done through a set-off or a counterclaim.

Set-off Defense or When You Want to "Balance the Accounts"

The set-off defense is primarily of a defensive nature. If you have your own claim against the plaintiff that is smaller than or equal to the value of the dispute, you can assert the set-off defense in court. This is a procedural action that allows you to "deduct" your claim from the amount demanded by the plaintiff. This means that the final amount of the lawsuit that you were supposed to pay will be reduced by the value of your claim.

The set-off defense is considered in court proceedings (we’ve written more about court proceedings here) as a preliminary question, meaning it’s an issue the court must resolve before deciding on the entire dispute. The court will focus on whether your asserted claim exists in the claimed amount (which it will also examine for the plaintiff’s claim) and whether the conditions for set-off are met.

Conditions for Set-off:

1. Reciprocity of claims: Both parties owe each other money.

2. Same type of performance: The claims must be of the same type, typically monetary claims.

Example: The plaintiff has filed a lawsuit for the payment of 50,000 CZK for an unpaid invoice for goods delivered to a customer. However, the customer also has an overdue invoice of 40,000 CZK for services provided to the supplier. The customer can use the set-off defense to reduce the plaintiff's claim to 10,000 CZK.

Counterclaim or When the Plaintiff Owes You More Than You Owe Them

Unlike set-off, a counterclaim is offensive in nature, and is sometimes referred to as a "reciprocal lawsuit." You can use it if your claim exceeds the amount of the lawsuit. As with the set-off, the court will not only consider the plaintiff's claim during the proceedings. However, the court has the option to separate the counterclaim into a separate proceeding (if it deems it more appropriate), which is not possible with the set-off defense.

Conditions for a Counterclaim:

1.Higher Amount: The claim you assert must be higher than the amount demanded by the plaintiff.

2. Burden of Proof: You must prove the existence of your claim, just like with an independent lawsuit.

Example: The plaintiff wants 50,000 CZK, but you have a claim of 80,000 CZK against them. In the counterclaim, you ask the court to decide not only on the plaintiff’s claim but also on your own. The court can then rule in your favor in a joint proceeding, and it will be the original plaintiff who has to pay you 30,000 CZK.

The disadvantage of a counterclaim, compared to the set-off defense, is that you must pay a court fee, which is calculated based on the amount of your claim.