Part Ⅱ Obligations
Chapter I General Provisions
Section 6 - Extinction Of Obligations
Sub-section 4 Offset
If two persons are bound by obligations for each other, and the objects of which are of the same kind and which are both due, each party may take his own obligation to offset the other party's, except the nature of the obligations or the agreement of the parties does not permit of it.
The agreement provided in the preceding paragraph shall not be a valid defense against any bona fide third party.
The offset shall be made with the expression of intent by one party to the other. As the mutual relationship of the obligations between themselves, it is extinguished to the extent of the corresponding amounts of the obligations deducted in the offset since the moment when the offset could be claimed.
The expression specified in the preceding paragraph, if made subject to a condition or to a time of commencement or ending, is void.
An offset may be made even though the obligations are to be performed in different places; but the party who has claimed the offset shall compensate the other party for any injury resulting therefrom.
Even if the claim of an obligation has been extinguished by prescription, it may also be offset, provided that the offset may be made prior to its extinction.
If the obligation is not subject to a judicial attachment, the debtor shall not claim for offset.
If the obligation is resulted from an intentional wrongful act, the debtor shall not claim for offset.
When an obligation has been attached by an order of the court, the third debtor of such obligation shall not take a claim which he has acquired from the creditor after the attachment to offset the obligation attached.
When it is provided by a contract that an obligation shall be performed to a third party, the debtor of such obligation shall not take the obligation of the other party to the contract to offset his obligation.
The provisions of Articles 321 to 323 shall apply mutatis mutandis to the offset.