Netting
"How does netting differ from set-off?"
Quick Answer
The accounting and legal process of consolidating multiple mutual obligations or financial positions between two parties to arrive at a single net payable amount.
Scope and Legal Distinctions
Contractual netting may combine multiple obligations under agreed settlement rules. It is not necessarily the same as statutory set-off or a regulated close-out mechanism.
What to Check in Practice
Identify eligible debts, currencies, valuation and insolvency treatment; do not assume a clause eliminates all enforcement or insolvency risk.
Sources & Authorities
Statutory framework and official guidance for this definition.
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