Chapter Third: Set-off

Article 328

Article 328: When two persons are respectively creditors and debtors to each other, each of them may offset their debt against their claim up to the amount of the lesser of the two.

Article 329

Article 329 - Compensation is only possible between debts having as their object sums of money or things of the same kind and fungible with each other.

Article 330

Article 330 - Only liquid and payable debts are susceptible to being set off; however, the term of grace does not prevent setoff. It is irrelevant whether the two debts are or are not payable at the same place. However, circumstances that would prevent payment also, in principle, prevent setoff.

Article 331

Article 331 - Compensation shall apply, regardless of the causes of one or the other debt, except in cases: 1 - Of a demand for restitution of an unjustly seized thing; 2 - Of a demand for restitution of a thing deposited or lent for use; 3 - Of a declared unattachable claim; 4 - Of the debtor's prior waiver of compensation.

Article 332

Article 332 - Compensation does not operate of its own accord, but only when invoked by one of the parties; it extinguishes the debt as soon as the conditions required for it to be opposable are met, abstracting from any subsequent events that may have occurred, including the prescription of one of the obligations.

Article 333

Art. 333 - Compensation, once opposed, operates in principle like a payment, but only up to the amount of the most junior debt. It extinguishes accessory obligations (hypothec, pledge, suretyship etc.) and, as far as it brings an end to these obligations themselves. However, the extinction of rights subject to registration at the land registry is obtained only through cancellation.

Article 334

Article 334 - The surety may plead compensation for what the creditor owes to the principal debtor, but the principal debtor cannot plead compensation for what the creditor owes to the surety, no more than a solidary co-debtor could rely on another debt owed by the creditor to another co-debtor. However, when the compensation has been pleaded by the surety or the solidary co-debtor, who have become creditors of the creditor, it extinguishes the debt against the principal debtor or other co-debtors, who are entitled to plead it.

Article 335

Article 335 - Compensation does not prejudice prior rights acquired by third parties.

Article 336

Article 336 - When several debts are compensable among the same persons, the rules established for imputing payments shall be followed for compensation.

Article 337

Article 337 - When incompatible qualities of creditor and debtor converge for the same obligatory relationship on the same person, a confusion occurs that extinguishes the obligation to the extent it takes place. When the cause of the confusion ceases to exist retroactively, the claim revives with its accessories vis-à-vis all parties, and the confusion is deemed never to have occurred.