Commonwealth Consolidated Acts

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Mutual credit and set-off

             (1)  Subject to this section, where there have been mutual credits, mutual debts or other mutual dealings between a person who has become a bankrupt and a person claiming to prove a debt in the bankruptcy:

                     (a)  an account shall be taken of what is due from the one party to the other in respect of those mutual dealings;

                     (b)  the sum due from the one party shall be set off against any sum due from the other party; and

                     (c)  only the balance of the account may be claimed in the bankruptcy, or is payable to the trustee in the bankruptcy, as the case may be.

             (2)  A person is not entitled under this section to claim the benefit of a set-off if, at the time of giving credit to the person who has become a bankrupt or at the time of receiving credit from that person, he or she had notice of an available act of bankruptcy committed by that person.

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