The Possibility of Invoking Set-off Against the Negotiable Instruments in English and Iranian Law

Document Type : Original Article

Author

Assistant Professor of Department of Private Law, Sari Branch, Islamic Azad University, Sari. Iran.

Abstract

This analytical-descriptive research aims to study the possibility of invoking setoff against the negotiable instruments in English and Iranian law. One of the issues with negotiable instruments in English law is that the right to invoke the set-off against a holder's claim for payment is available to the liable of payment, including the maker, endorsers, and so on. Although objections can be raised with set-off as a means of defense, a definite distinction can be made between them in the negotiable instruments law. In Iranian law, with ambiguity in the position of legislator and silence of the judicial procedure, legal writers have taken contradictory views on this issue. While some people consider it as one of the effects of the principle of inadmissibility of objections against the holder in good faith or the implicit agreement of the parties on the non-occurrence of set-off, along with matters such as payment of the bill of exchange and substitution of the obligation, Others stated that the debt arising from the commercial document is subject to the general rule of set-off, which can be invoked. As a result, it seems that in English law, according to the consideration of set-off as a rule of procedure and negotiable instruments as an obligation without a condition of payment, while the defendant is prohibited from performing independent clearing against the holder, he can perform an integrated set-off and cite related. On the contrary, the evidence - which is deduced from some provisions of Iran's commercial law-shows that against the holder of the commercial document, setoff can absolutely be invoked.

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History

  • Receive Date: 07 September 2022
  • Revise Date: 31 December 2022
  • Accept Date: 31 January 2023

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