The second party did not receive the statement of offset
Even in situations where the parties have set off counterclaims that are similar, and such set-off does not fall under cases of inadmissibility, the court may not recognize it. In order for an obligation to be terminated by offset, the counterparty must receive a statement to this effect.
Often the courts do not recognize it if there is no evidence in the case materials that one party sent an application for offset, and the second received it. Also, the court may not accept as evidence of sending and receiving an application for offset documents sent by email, if the agreement did not provide for the possibility of exchange in this way.
The courts note that the case file must include evidence of the filing of the application before the plaintiff goes to court. The judges justify this by saying that it is impossible to offset claims at the trial stage.
Send a statement to your counterparty. It must clearly indicate the will to offset specific claims.
Documenting
The offset of mutual claims, like any business transaction, must be documented (Clause 1, Article 9 of the Law of December 6, 2011 No. 402-FZ).
Civil legislation does not impose any special requirements for registration of offsets. At the same time, Article 410 of the Civil Code of the Russian Federation states that to carry out offset, a statement from one of the parties is sufficient.
In practice, this means that counterclaims can be repaid unilaterally, having previously notified the counterparty in writing. A standard sample application for netting is not established by law, so it can be drawn up in any form.
The party that has sent an application for offset of similar counterclaims must have confirmation that the document has been received by the counterparty and he has no objections to the offset.
Advice: it is better to send an application for mutual settlement to the counterparty by registered mail with notification. If, in the event of a dispute, the organization cannot prove that the counterparty received this statement, the offset of the counter-obligation may be declared invalid (clause 4 of the information letter of the Supreme Arbitration Court of the Russian Federation dated December 29, 2001 No. 65, resolution of the FAS Volga District dated January 28, 2008 No. A55-6395/2007, Central District dated August 31, 2006 No. A23-3149/03G-10-121, West Siberian District dated May 2, 2006 No. F04-1722/2006(21923-A81-10)).
If the initiator of the offset indicates in the application a specific date from which the obligations of the parties are considered fulfilled, the offset is recognized as having taken place from this date. If such a date is not specified, then the offset is considered to have taken place from the day the counterparty received the application.
The second option for registering offset of counter obligations is drawing up an act of offset. The netting act is also not a unified accounting document, therefore it can be drawn up in any form in compliance with the requirements for primary accounting documents (Article 9 of the Law of December 6, 2011 No. 402-FZ, resolution of the Federal Antimonopoly Service of the North-Western District dated May 21, 2007 No. A05-12882/2006-25).
If the act of offset does not indicate the date on which the offset is carried out, the moment of mutual repayment of obligations is recognized as the day the act is signed by the parties.
Advice: regardless of how the offset is formalized (at the request of one of the parties or on the basis of a joint act), in the documents drawn up, describe in detail all the circumstances of the offset . The absence of such data may lead to disputes with the counterparty and the tax office.
Please provide the following information in detail in your application:
- what obligations of the parties are repaid by offset;
- the grounds for the occurrence of these obligations (with links to supporting documents: contracts, invoices, certificates of work performed (services rendered), numbers of issued invoices);
- the amount for which mutual claims are offset.
The application (act) should separately highlight the amount of VAT for each counter-obligation. This will allow the organizations that carried out the offset to correctly reflect this operation in accounting and tax accounting.
Failure to provide such information may result in disputes that may expose the organization to contractual penalties. There are examples of court decisions that confirm this position (see, for example, the ruling of the Supreme Arbitration Court of the Russian Federation dated November 12, 2007 No. 14790/07, the resolution of the Federal Antimonopoly Service of the Volga-Vyatka District dated September 26, 2007 No. A11-13478/2006-K1- 11/612). In addition, incorrect registration of offsets may result in tax penalties. For example, with the cash method of calculating income tax, the tax inspectorate may not recognize expenses for which the arrears of payment were repaid by an undocumented offset (clause 3 of Article 273, clause 1 of Article 252 of the Tax Code of the Russian Federation).
The application did not indicate the intention to offset
For offset, a statement from one party is sufficient. Such a statement must clearly indicate the sender's will to terminate the obligation. The court does not recognize the set-off as complete if the application only proposed to consider the issue of it, did not indicate the fact of the set-off, there were no amounts in respect of which the set-off was carried out, and there was no amount that would remain after it was carried out.
Also, the acts of reconciliation of mutual settlements and references to agreements in respect of which offset can be made cannot be evidenced by the documents attached to the letter.
Indicate in the application in respect of which claims and amounts the offset is being made. In case of partial offset, it is necessary to indicate the amount of claims that will remain after the termination of obligations.
Fable of the case
Two companies entered into a contract to carry out construction work.
By the decision of the arbitration court in the first case, the cost of work and a penalty were recovered from the Customer in favor of the Contractor. According to the Customer's counterclaim, a sum of money was recovered from the Contractor in the amount of the Customer's costs for correcting the defects, penalties and legal costs.
As a result of the offset made by the court, 376,778.10 rubles were recovered from the Contractor in favor of the Customer.
The Contractor again filed a claim against the Customer in the arbitration court and demanded to pay the contractual penalty, but for a different period. The Customer filed a counterclaim to recover interest from the Contractor under Art. 395 Civil Code. In the second case, the court satisfied the Contractor's claim in full, and the Customer's claim in part. As a result of the offset, 566,673.56 rubles were recovered from the Customer in favor of the Contractor.
Interesting on the topic: The contractor does not fulfill his obligations. Contract court. The customer does not sign the act and does not pay for the work. What to do?
Both the second and third instances upheld the decision.
The customer did not agree with the opinion of the courts and sent a cassation appeal to the Supreme Court.
The RF Supreme Court overturned the judicial decisions and returned the case to the arbitration court of first instance.
The application was sent or received by an unauthorized person
In order for the court to recognize the set-off made by the parties, it is not always enough to comply with the terms of the set-off, to check whether it falls under the prohibitions of the law or the agreement, it is also necessary to clearly state the intention of the party in the application. A situation where the application was received by a person who was not authorized to receive correspondence may prevent the court from recognizing the offset. The same consequence will occur if an application is sent by an unauthorized person.
Offset is an analogue of the proper fulfillment of obligations.
Example: a company, under an agreement with a plant, repaired a floating workshop. The cost of the work was 4 million rubles. The plant paid for only part of the work - 3 million rubles. The company filed a claim, which remained unanswered, and then filed a lawsuit.
The first instance recovered the debt partially. The fact is that the plant announced the offset of counterclaims in the amount of 200 thousand rubles. in connection with the provision of rigging services to the company. The defendant confirmed this and presented the court with an act with the signatures of the parties.
The appeal changed the decision of the first instance and recovered the debt in full. The court explained this by saying that the plant did not prove that the company had received the offset application. The document bore the signature of a plant employee who did not sign anywhere else, although the defendant explained that the parties corresponded through this person.
However, the plant did not submit a single document to the case file that would confirm this fact. Therefore, the court did not recognize that the employee was authorized to send the application.
The district court agreed with the conclusions of the appeal that the set-off cannot be considered completed. The Supreme Court judge also found no grounds for review and refused to transfer the case to the Collegium for Economic Disputes.
Check the representative's credentials. Make sure that the recipient of the application is a person who is authorized to receive correspondence on behalf of the addressee.
Moment of termination of the obligation by offset
The law does not specify the moment of termination of the obligation. Here it is necessary to distinguish two things: the moment of exercise of the right to set-off and the moment of implementation of set-off.
The moment of exercise of the right to offset is the moment of delivery of the application to its addressee or the moment from which the application is considered delivered according to the rules of Art. 165.1 of the Civil Code on legally significant messages.
As for the moment of offset, judicial practice has previously been based on the concept of retroactive action of the application for offset, its retroactive force, and paragraph 15 of the Resolution of the Plenum of the RF Armed Forces No. 6 enshrined it.
The essence of the concept is that obligations are considered terminated from the moment the obligations become capable of offset, and not from the moment a statement about it is received. Since usually the deadline for fulfillment of two obligations does not occur simultaneously, termination occurs at a time later than the due date.
Let's look at this with an example. The deadline for fulfillment for the active claim was June 15, 2021, for the passive claim - July 1, 2021. The offset was announced on July 5, 2021. The deadline for fulfillment for both claims came before the statement of offset and the obligations are considered terminated as of July 1, 2021.
What is the point of such a decision? This is necessary so that the parties are in an approximately equal position in the event of accrual of penalties for late execution.
In para. 2 clause 15 of the Resolution of the Plenum of the Supreme Court of the Russian Federation No. 6 states that interest under Art. 395 of the Civil Code or a penalty is accrued until the termination of the obligation by offset. If any amounts were accrued and paid for the period after the moment when the offset is considered completed, then they are subject to refund.
Let’s assume that according to A’s request to B, the deadline for execution came in September 2021, and according to B’s request to A - in May 2021. For the first, a contractual penalty in the form of a penalty is charged, for the second - only interest under Art. 395 Civil Code. The competition was announced in 2021. If it had been considered completed from the moment the application was delivered, then there would have been a significant difference in the counterclaims in favor of A.
Retroactive force makes it possible, as far as possible, to prevent too much bias in favor of the party that achieved the inclusion of a more favorable penalty clause in the contract. Therefore, once claims become offset, they cease and no penalties will be assessed from that point on.
Retroactivity can be canceled by agreement of the parties by agreeing on a set-off for the amount that actually existed at the time of its conclusion. The principle of freedom of contract is stronger than retroactivity.
It happens that obligations become reciprocal as a result of a change in persons in the obligation. In this situation, the moment of termination of requirements cannot be rolled back beyond the date of its implementation.
The claims of the parties against whom they want to set off are controversial
In judicial practice, there is an ambiguous position, according to which, with the same object of claims, for example, money, such claims should be indisputable. Some courts agree with this view. They do not recognize the set-off, since the demands for recovery of money are not undisputed, including the party denying the demand that is sent.
Courts that consider disputes regarding the termination of obligations by set-off first check whether the parties have complied with the conditions for the admissibility of set-off. If, in addition, the parties ignored legislative prohibitions, the court will declare the offset invalid.
The question of the indisputability of the claims aimed at set-off was considered by the Supreme Court, which came to the opposite and more logical point of view. The conditions for termination of obligations by offset and cases of its inadmissibility are defined in Articles 410–412 of the Civil Code, which do not define as conditions the indisputability of claims and the absence of objections from the parties regarding the presence and amount of claims.
Consequently, a dispute regarding one of the claims does not prevent the filing of an application for set-off, if at the time of the application proceedings have not been initiated in court regarding the obligation, the termination of which the claim being set off is aimed at.
A company that has received a statement of offset has the right to dispute the existence of an unfulfilled obligation from which the claim was made. However, such a challenge in itself will not be grounds for invalidating the application as a unilateral transaction.
Currently, the prevailing position in judicial practice is that based on the clarifications of the Supreme Court. For example, the court rejected the applicant’s arguments in the cassation appeal regarding the mootness of the counterclaim and declared the set-off between the parties completed. Three authorities confirmed that the defendant had a counter-obligation to the plaintiff's obligation.
Conditions for mutual settlement
Unilateral offset is possible if three conditions are met simultaneously.
Firstly, organizations that intend to set off must have counterclaims against each other. This means that at least two different agreements are concluded between them, in one of which the organization is a debtor, and in the other, a creditor.
Secondly, the counterclaims of organizations must be homogeneous.
Thirdly, offset is possible if the deadline for fulfilling the counterclaim is:
- has already arrived;
- was not specified in the contract;
- was determined by the moment of demand.
Offsetting a counterclaim of the same type, the deadline for which has not yet arrived, is also possible. But only in cases provided by law.
For offset, a statement from one of the parties is sufficient.
If the requirements are heterogeneous or the deadline for fulfillment of at least one of the obligations has not yet arrived, offset can be made only by agreement of the parties (paragraph 4, paragraph 4 of the resolution of the Plenum of the Supreme Arbitration Court of the Russian Federation dated March 14, 2014 No. 16).
This procedure follows from the provisions of Article 410 of the Civil Code of the Russian Federation.
Situation: what counterclaims are considered homogeneous for offset purposes?
Liabilities are recognized as homogeneous if they require the same method of repayment and are expressed in the same currency.
The condition that offset is possible in relation to similar counterclaims is contained in Article 410 of the Civil Code of the Russian Federation. However, the very concept of “homogeneous requirement” is not defined by civil law.
Paragraph 7 of the appendix to the information letter of the Presidium of the Supreme Arbitration Court of the Russian Federation dated December 29, 2001 No. 65 states that the legislation does not insist that the requirement for offset arise from the same obligation or from obligations of the same type. It follows from this that obligations that are related to the execution of different contracts, but involve the same method of repayment, can be considered homogeneous. For example, if sales and contract agreements concluded between the same organizations initially assumed a monetary form of payment, then, subject to other conditions, these organizations have the right to offset mutual claims. That is, the buyer’s obligations to pay for the goods delivered to him can be offset against the fulfillment of the customer’s obligations to pay for the work performed for him.
If the obligations of organizations under one agreement (for example, under an exchange agreement) are expressed in natural units, and under another (for example, under an agreement for the provision of paid services) - in monetary form, then these obligations are not recognized as homogeneous.
Also, monetary claims, one of which is expressed in rubles and the other in foreign currency, are not recognized as homogeneous. This is due to the fact that foreign and Russian currency are independent types of property (Articles 140, 141 of the Civil Code of the Russian Federation). The court came to a similar conclusion in the resolution of the Federal Antimonopoly Service of the North Caucasus District dated December 1, 1999 No. F08-2593/99.
It is impossible to carry out offsets under such agreements.
Thus, counter obligations can be offset if they require the same method of repayment and are expressed in the same currency (for example, only in rubles, only in US dollars). Settlement can be carried out even if counter-obligations are expressed in conventional units. But provided that 1 y. i.e. for both the debtor and the creditor it is equal to the same currency.
