Rights of Set-Off

  Rights of Set-Off

The right to combine two accounts is known as set-off.

The right of Set-off is Banker’s discretion.

Right Of Set-Off

1.    The Same name and the same right

2.    Debts due but not future or contingent debts

3.    The debts must be a sum certain absolute before exercising the right of Set-Off

4.    No agreement to the contrary

5.    Banker’s discretion

6.    Right of Set-Off and Garnishee Order

Right of Appropriation

While paying in monies a customer has a right to direct his banker that such payment may be appropriated against a particular debt. If it is not made clear by the Customer, in such cases the banker may exercise his right for appropriation and may apply same in payment of any debt.

Rule in Claytons’ Case

The first item on the debit side of the account is discharges or reduced by the first item on the credit side. The credit entries in the account adjust or set-off the debit entries the debit entries in the chronological order.

Rights of Banker

Lien means right of the creditor to retain possession of goods / securities owned by the debtor till the debt is paid. Lien is of two kinds

Special Lien – Where the rights conferred on the creditor confines to particular

goods, it is called Special Lien.

General Lien – When the right applies to all goods it is called general Lien.

Banker’s General Lien is not applicable in following Safe Custody Articles

Documents / Money Deposited for specific purpose Securities/Valuables left through oversight at the bank’s premises

Immature Debts

Stolen goods

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