Set-off Statement and Agreement

Set-off – professional template in Word format

Set-off (kompenzacija) is a way of settling obligations without payment – two parties who owe each other at the same time set their claims off against one another up to the amount of the smaller claim, and only the difference is paid. In business practice this is an everyday situation between partners who both issue and receive invoices from each other.

Set-off is governed by the Obligations Act (Zakon o obveznim odnosima). For a unilateral set-off the claims must be mutual, of the same kind and due, and the effect arises from a statement communicated to the other party. If those conditions are not met, a set-off by agreement remains, and the template contains a separate bilateral form for it with a specification table.

Key features

• Professional template – two forms drawn up in line with the provisions of the Obligations Act (Zakon o obveznim odnosima) on set-off.
• Practical reliability – the set-off amount, the balance and the deadline for paying the remainder are expressly established, so there are no later disagreements about what is still outstanding.
• Easy customisation – the specification table takes any number of items, and the bilateral form also has an option for a third party.
• Digital availability – the DOCX file with instructions arrives by e-mail immediately after purchase, ready for printing, signing and entry in the books.

What the template includes

• Form A – a unilateral set-off statement with the details of the party making the statement and of the party receiving it
• Separate articles for the claim of the party making the statement and for the claim of the party receiving it, with the basis, the amount and the maturity date
• A statement of set-off up to the amount of the smaller claim and a provision that the claims are extinguished as of the date on which the conditions for set-off were met
• An article on the remaining debt, with an option stating that after the set-off there are no further mutual claims
• A space for the other party to confirm receipt of the statement
• Form B – a bilateral set-off agreement with a specification table (creditor, debtor, basis, maturity, amount)
• An option for a third party for a multilateral set-off
• Articles on the set-off and the balance, on payment of the remainder to an IBAN and on recording the set-off in the business books of each party

We have explained the conditions for a set-off, the difference between a statement and an agreement, and the accounting treatment in our guide on set-off and compensation. Where three parties take part in closing debts, a delegation of payment agreement is more appropriate, and for transferring a claim to a new creditor use the assignment of receivables agreement.