Essay Flashcards

Facts: Luna Traders, Inc. (LTI) owes Nova Equipment Services, Inc. (NES) 420,000 pesos for a shipment of electronics delivered earlier. NES owes LTI 300,000 pesos for maintenance services performed on LTI’s fleet of delivery vehicles. Both debts are due and liquidated, evidenced by written instruments. There is no stipulation excluding compensation, and no third-party claim that would affect the set-off. A third-party creditor, Orion Credit Union (OCU), has an unsecured claim against LTI for 70,000 pesos arising from a separate loan not connected to the two debts and not securing or attaching to funds in the two debts. (a) Does compensation (set-off) apply between LTI and NES? (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.