Essay Flashcards

Junction Enterprises, Inc. (JEI) and Meliora Maintenance, Inc. (MMI) are merchants dealing in industrial goods and services. JEI owes MMI 320,000 pesos for a shipment of chemicals delivered last quarter. MMI owes JEI 210,000 pesos for maintenance services performed on JEI’s fleet of delivery trucks. Both debts are due and liquidated, evidenced by written instruments. There is no stipulation excluding compensation, and no third party has a claim that would affect the set-off. (a) Does compensation (set-off) apply between JEI and MMI? (b) If compensation applies, what amount is extinguished and what remains payable? (c) Would any third-party claim affect the set-off in this scenario? Explain briefly.