recoupment
Definition
Recoupment is when one party reduces the amount they owe someone by subtracting damages that the other party caused them in the same transaction. Think of it as a built-in offset where instead of filing a separate lawsuit, you simply pay less because the other side already owes you money from that same deal.
Example
A contractor bills you $10,000 for a renovation but their shoddy work caused you $3,000 in repair costs, so you pay only $7,000 and claim recoupment for the difference.
Watch Out
Recoupment only works when the claim arises from the exact same contract or transaction, so you cannot use it to reduce what you owe on one deal because someone wronged you in a completely separate deal.
See which terms appear in your contract?
This definition is for informational purposes only and does not constitute legal advice. Please consult with a licensed attorney for legal guidance.