Bankruptcy Act 1966

PART VI - ADMINISTRATION OF PROPERTY  

Division 1 - Proof of debts  

SECTION 86   MUTUAL CREDIT AND SET-OFF  

86(1)   [Mutual dealings]  

Subject to this section, where there have been mutual credits, mutual debts or other mutual dealings between a person who has become a bankrupt and a person claiming to prove a debt in the bankruptcy:

(a) an account shall be taken of what is due from the one party to the other in respect of those mutual dealings;

(b) the sum due from the one party shall be set off against any sum due from the other party; and

(c) only the balance of the account may be claimed in the bankruptcy, or is payable to the trustee in the bankruptcy, as the case may be.

86(2)   [Limitation on claim]  

A person is not entitled under this section to claim the benefit of a set-off if, at the time of giving credit to the person who has become a bankrupt or at the time of receiving credit from that person, he or she had notice of an available act of bankruptcy committed by that person.