Legal Definitions - compulsory counterclaim

A compulsory counterclaim is a specific type of legal claim that a defendant in a lawsuit *must* bring against the plaintiff in the very same legal proceeding. The obligation arises when the defendant's claim is so closely related to the plaintiff's original claim that it "arises from the same transaction or occurrence." If the defendant fails to assert this type of counterclaim in the ongoing lawsuit, they permanently lose the right to bring that claim against the plaintiff in the future, either in the current action or in a separate lawsuit.

The purpose of this rule is to promote judicial efficiency by ensuring that all closely related disputes between the same parties are resolved together in one comprehensive legal action, preventing the need for multiple lawsuits over essentially the same set of facts.

• Example 1: Car Accident Liability

  Imagine Sarah sues David for damages to her car and personal injuries, claiming David negligently ran a red light and caused their collision. David, however, believes Sarah was actually at fault because she was speeding and swerved into his lane. David also sustained damage to his car and minor injuries.

  In this scenario, David's claim against Sarah for his damages and injuries is a compulsory counterclaim. Both claims stem from the exact same car accident ("transaction or occurrence"). David *must* assert his claim against Sarah in Sarah's lawsuit. If he fails to do so, he will lose his right to ever sue Sarah for the damages and injuries he suffered in that particular accident.

• Example 2: Construction Contract Dispute

  Suppose BuildRight Construction Co. sues Mr. and Mrs. Jones for unpaid invoices related to a home renovation project. BuildRight claims the Joneses owe them the final payment for work completed. The Joneses, however, believe BuildRight failed to complete the project on time, used substandard materials, and performed shoddy work, causing them significant additional expenses to fix the defects and delays.

  The Joneses' claim against BuildRight for breach of contract, defective work, and delays is a compulsory counterclaim. Both BuildRight's claim for payment and the Joneses' claim for damages arise from the single construction contract and its performance ("same transaction or occurrence"). The Joneses *must* bring their claims against BuildRight within BuildRight's lawsuit. If they do not, they forfeit their right to sue BuildRight later for those specific issues related to that renovation project.

• Example 3: Business Software Licensing

  Consider TechSolutions Inc. suing Global Enterprises for overdue licensing fees for a custom software package. TechSolutions asserts Global Enterprises failed to make payments as agreed. Global Enterprises, in turn, contends that the software was fundamentally flawed, did not perform according to the agreed-upon specifications, and caused significant operational disruptions and financial losses far exceeding the licensing fees.

  Global Enterprises' claim for damages due to the defective software is a compulsory counterclaim. Both parties' claims originate from the same software licensing agreement and its implementation ("same transaction or occurrence"). Global Enterprises *must* present its claim against TechSolutions in the same lawsuit. If Global Enterprises does not raise this counterclaim, it will be barred from suing TechSolutions later for the damages caused by the alleged defects in that specific software package.