Abstract:
No set-off (NSO) clauses, widely used in various contracts and transactions, typically state that payment must be made by one party to the other party without deduction, set-off or counterclaim. Relevant statutes regulate the validity or enforceability of such clauses or have an impact on them in other ways. But court decisions on the relationship of NSO clauses with some statutes are arguably problematic. The court has held that NSO clauses override s 290(4)(b) of the Companies Act 1993, so that an offsetting claim precluded by such a clause can no longer be a ground for setting aside a statutory demand, even though it would be a valid ground according to s 290(4)(b). This article argues that there is no conflict between NSO clauses and s 290(4)(b); and that, even assuming a conflict, s 290(4)(b) should prevail. The court has also held that NSO clauses exclude mortgagees’ duty of care under s 176 of the Property Law Act 2007 and are therefore invalid. Again, this article argues for the contrary conclusion.