Set-off

Under Turkish law, set-off allows a party who owes a debt to a person holding a similar claim against them to extinguish both debts by a unilateral declaration. The debts are cancelled up to the amount of the smaller one, achieving settlement without any actual payment.

Set-off requires mutuality of the claims, obligations of the same kind (typically money) and that the claim of the party declaring set-off is due. It arises frequently in current account relationships, landlord-tenant disputes and as a defence against enforcement proceedings.

Certain claims are protected: maintenance claims and the statutorily protected portion of employee wages cannot be set off without the creditor's consent. Parties may also waive the right of set-off in advance.