Legal Definitions - recompensation

In Scots law, recompensation refers to a specific argument made by a plaintiff (the person bringing a lawsuit) in a case where they are trying to recover money owed to them.

It comes into play when the defendant (the person being sued) claims that the plaintiff actually owes *them* money, and therefore, this amount should be subtracted from any money the court might award to the plaintiff. The plaintiff's argument of recompensation is a counter-claim stating that they have already paid the specific debt the defendant is claiming, and as such, that particular debt cannot be used to reduce the amount the defendant owes the plaintiff.

Here are some examples to illustrate this concept:

• Business Services Dispute:

  Imagine a marketing agency, Creative Campaigns Ltd. (the plaintiff), sues a client, Tech Innovations Inc. (the defendant), for an unpaid invoice for a recent advertising campaign. Tech Innovations Inc. responds by claiming that Creative Campaigns Ltd. owes them for a software license they used from Tech Innovations Inc.'s proprietary platform last year, and this amount should be deducted from the advertising fee.

  Creative Campaigns Ltd. then makes a recompensation argument, stating, "We acknowledge using your software, but we paid for that license in full six months ago, as evidenced by this bank transfer record. Therefore, that specific software license fee cannot be used as a setoff against the advertising fees you owe us for the current campaign."

• Construction Project Payment:

  Consider a homeowner, Mr. Henderson (the plaintiff), who sues a building contractor, Solid Foundations Co. (the defendant), for failing to complete a renovation project on time and to the agreed standard. Solid Foundations Co. counters by claiming that Mr. Henderson owes them for some extra materials they supplied for a separate, minor repair job they did for him a few weeks prior, and this amount should reduce any damages awarded to Mr. Henderson.

  Mr. Henderson then uses recompensation to argue, "I agree you supplied those materials for the minor repair, but I paid Solid Foundations Co. for that specific repair, including the materials, immediately upon its completion. Here is the receipt marked 'paid.' Therefore, that particular debt is settled and cannot be used to offset what you owe me for the incomplete renovation."

• Supplier-Restaurant Relationship:

  Let's say a food supplier, Fresh Harvest Distributors (the plaintiff), sues a restaurant, The Gilded Spoon (the defendant), for a large outstanding invoice for recent produce deliveries. The Gilded Spoon claims that Fresh Harvest Distributors owes them for a batch of spoiled ingredients delivered the previous month, which caused them to lose revenue, and this amount should be set off against the current invoice.

  Fresh Harvest Distributors makes a recompensation argument, explaining, "We acknowledge the spoiled produce incident. However, we issued a full credit note for that specific batch of produce, which was applied to and settled your *previous* invoice. Therefore, that particular debt has already been accounted for and cannot be used again as a setoff against the *current* outstanding invoice."