Mutual dealings-bankruptcy and liquidation, Financial Accounting

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MUTUAL DEALINGS

A right of set-off is allowed where there have been -

(a) Mutual credits, debts or other dealings resulting in pecuniary liabilities,
(b) Between the debtor and a creditor in the same right,
(c) Prior to the date of the receiving order,
(d) Without notice of an available act of bankruptcy.

An account is taken as at the date of the order, and the balance paid or claimed by the creditor.

Persons with mutual dealings cannot contract out of the right of set-off given by s.36 ibid though it may be possible for them to agree that their dealings shall not be regarded as mutual. National Westminster Bank Ltd. v Halesowen Presswork and Assemblies Ltd. (1972).


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