One bill offsets another
One bill offsets another
"In the context of a commercial relationship between myself and Mr X, the following case arises: I have to pay an invoice that Mr X sent me. However, Mr X himself must pay me an invoice that I sent him. However, Mr X does not have the means to pay my invoice. Question: can I offset my invoice against his to the same extent? Thank you for your kind consideration of my question, and I hope that my question is easy to understand.
Jean, Geneva
The term you use is correct: the mechanism you have in mind is called netting and is governed by articles 120 et seq. of the Swiss Code of Obligations (CO).
When two people owe each other sums of money or other services of the same kind, each of the parties may set off its debt against its claim, if both debts are due. The invoice you intend to set off must be due for you to be able to claim it as payment of Mr X's invoice, unless you are claiming it as part of Mr X's bankruptcy.
The law specifies that the debtor may set off the claim even if it is disputed.
However, this claim must have been valid at the same time as your other party's claim, as the law states that the set-off of a time-barred claim can be invoked, provided that it was not time-barred before the time when it could be set off.
To set off a debt, all you have to do is inform "Mr X" of your intention to do so, after which the two debts will be deemed to have been extinguished to the extent of the amount of the smaller debt.
However, Article 125 of the Swiss Code of Obligations prohibits the extinguishment by offsetting of certain claims where the law protects the right to collection. These include, in particular, maintenance contributions and the part of the salary that is absolutely necessary for the maintenance of the debtor and his family, as well as claims under public law in favour of the State and local authorities.
