a.a. Persons who in their own rights are debtors and
creditors of
each other extinguishes the debts to the
concurrent amount
b.b. Guarantor
can set up compensation of what principal
debtor may owe creditor
c.c. Compensation may be total or partial
d.d. Parties may agree to compensate debts not yet due
e.e. When one or both debts are rescissible or voidable,they may
be compensated before they are judicially
rescinded or avoided
f.f. Requisites of legal compensation (by operation of law
):
1.1. Parties are principal creditors and debtors
of each other
2.2. Both debts consist in sum of money or
consumable of
same
kind and quality
3.3. Both debts are due and demandable
4.4. Two debts
are liquidated (amount is certain)
5.5. No retention or controversy commenced by
3rd party
b.g. Compensation after assignmenti.
i Assignment
made with consent of debtor
- Debtor cannot set up compensation against previous
creditor
ii.Assignment with
knowledge but without consent
- Debtor can set up compensation for debts before
the
notification
- Debtor cannot set up compensation with
respect to debts
which matured after notification
iii.
Assignment without knowledge of debtor
- Debtor can set up compensation for debts maturing
before
he learned of
assignment
c.h. Compensation cannot take place in following case:
i.Debtsfrom Contracts of Depositum (A person receives a
thing
belonging to another for safekeeping and of returning
the
same; not bank deposits)
ii. Debts from Commodatum (One person delivers to another
something for him to
use and return it)
iii. Claims for support
due by gratuitous title
iv. Debts from Criminal
offense
v. Taxes
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