What conditions should be fulfilled to exercise the right of set-off

What conditions should be fulfilled to exercise the right of set-off

What conditions should be fulfilled to exercise the right of set-off

What conditions should be fulfilled to exercise the right of set-off? It is s statutory right which enables a banker to combine two accounts in the name of the same customer and to adjust the debit balance in one account with the credit balance of the
other account. A banker may exercise the right of Set-off or combine the two accounts of a customer not only in the same branch of the bank but also in the case of two or more  accounts of the same customer in different branches of the same bank, as was decided in the case of Garnett Vs Mckervan (1872). However, this right of Set-off may be exercised subject
to the fulfillment of the following conditions:

(a) Both the accounts of the customer must be in the same name and in the same right. The same right means that funds belonging to someone else but standing in the name of the account holder should not be made available to satisfy his personal debts.

(b) The funds in a Trust account are deemed to be in different rights and therefore, a debit balance in a personal account cannot be set-off against the credit balance in the Trust account which may be in the name of the customer.

(c) This right of set-off may, however, be applicable to existing debts due from the customer and not to contingent debts or liabilities falling due at a future date.

(d) It may be exercised by a bank only if there is no agreement to the contrary.

(e) The right of Set-off would be exercised better if the banker had given due notice of his intention to set-off in order to avoid inviting the trouble of returning a cheque drawn on the credit balance of one of them as was decided in the case of Greenhaigh Vs Union Bank of
Manchester (1924). Though the judgment in the above case is not considered as a binding judgment, it is better a notice of intention to set-off is given by the banker in support of his action.

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What conditions should be fulfilled to exercise the right of set-off? 

What conditions should be fulfilled to exercise the right of set-off? 

What conditions should be fulfilled to exercise the right of set-off?

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