Recoupment

Recoupment is the act of recovering money or assets that are due, or offsetting a claim with damages or credits arising from the same transaction. It can apply in legal, financial, or administrative contexts and may involve reclaiming payments made in error, recovering costs, or recouping invested funds from future revenues.

In legal terms, recoupment is a defense or counterclaim that allows a defendant to offset the amount claimed by the plaintiff with damages or credits arising from the same transaction or occurrence. It is distinct from a set-off, which typically involves independent claims and may not be tied to the same underlying event. The availability and scope of recoupment depend on jurisdiction and the specifics of the dispute.

In administrative and government contexts, recoupment refers to reclaiming funds that were disbursed in error or overpaid, such as tax refunds, welfare benefits, or other subsidies. Agencies implement procedures to recover these overpayments, which may involve withholding future payments or pursuing repayment.

In business and finance, recoupment describes recovering invested costs from revenues, often within contract terms. For example, a studio may have a recoupment clause requiring it to recover production costs from earnings before profits are shared. In other settings, recoupment serves as a form of cost recovery or offset against liabilities.

Limitations and variations exist across jurisdictions and contexts. The term is sometimes used interchangeably with set-off, but recoupment generally refers to offsets linked to the same transaction, while set-off can involve broader or unrelated claims.