set-off
noun · Aufrechnung
Aufrechnung, the unilateral set-off of §§ 387 ff. BGB, declared, not agreed, and striking backwards, § 389 BGB extinguishes both claims from the moment they first faced each other. Verrechnung is the bookkeeping cousin, the agreed netting of a running account.
Which translation, when
Why
English set-off lives largely in procedure and equity, a defence shaped by the forum. The German Aufrechnung is substantive self-help, § 387 BGB asks for mutuality, like kind and a due counterclaim, § 388 BGB lets one party declare it, no consent, no court, and § 389 BGB adds the startling feature, both claims count as extinguished from the moment they first stood against each other, default interest unwinds with them. Around the institution sit rules the English reader will not guess: no set-off against a claim from an intentional tort, § 393 BGB, and standard terms cannot take the right away wholesale, § 309 Nr. 3 BGB voids a no-set-off clause that reaches undisputed or finally adjudicated counterclaims. So the translation choice is small and the imported mechanics are not, a set-off clause under German law is negotiating with a statutory machine that has retroactive gears.
Typical mistakes
- Verrechnung for the exercised right undersells it, the word describes booking entries, the legal act is the Aufrechnung and the letter that performs it is an Aufrechnungserklärung.
- No-set-off boilerplate hits a wall, § 309 Nr. 3 BGB, standard terms cannot exclude set-off with undisputed or finally adjudicated claims, the English blanket ban needs a German carve-out to survive.
- The retroactive effect is easy to miss, § 389 BGB unwinds default interest back to the Aufrechnungslage, so calculating interest as if set-off worked only from the declaration gets the German timeline wrong.
What matters
Payment disputes in running supply relationships are the arena: the buyer shorts an invoice and the English letter asserts a set-off. The German version declares, hiermit erklären wir die Aufrechnung, § 388 BGB, and if the claims had faced each other for months, § 389 BGB rewinds the default interest to that day. The word Verrechnung in that letter performs nothing, it reports arithmetic.
What the machine misses
Set-off drifts in machine output towards Verrechnung, the accounting word, and sometimes towards Ausgleich, plain compensation. Neither performs the legal act, the German institution is the Aufrechnung with its unilateral declaration and its backwards-striking effect, and a letter that meant to extinguish two claims ends up describing a bookkeeping operation instead.
Examples
| to set off a claim against | eine Forderung aufrechnen gegen |
| declaration of set-off | die Aufrechnungserklärung |
| a no-set-off clause | ein Aufrechnungsverbot |
| the right of set-off | das Aufrechnungsrecht |
More notes on these sections
liquidated damages Vertragsstrafe
negligence Fahrlässigkeit
entire agreement vollständige Vereinbarung