The set-off of a time-barred claim may still be invoked: its extinguishing effect occurs on the date on which its conditions are met, not on the date on which a party invokes it. On the basis of Article 1347, paragraph 2, of the French Civil Code, the commercial chamber quashes the decision which had held time-barred an application for set-off made more than five years after the invoices relied on were issued.
Key points
- The extinguishing effect of set-off occurs on the date on which its conditions are met, and not on the date on which a party asserts it.
- A business sued for payment may therefore rely on its own invoices even though the limitation period (prescription) for those invoices had expired on the day it invoked set-off.
- The useful debate concerns the date on which the conditions for set-off were met, not how late the set-off was invoked.
- The due date of each reciprocal claim becomes the decisive element to keep and to document.
A set-off held time-barred by the court of appeal
The date that matters is not that on which set-off is invoked, but that on which its conditions are met. In the case decided by the commercial chamber (Com., 1 July 2026, No. 24-20.979), a sole trader had, since 2006, been hiring out a chauffeur-driven vehicle to a client company. On 25 August 2020, the sole trader brought a claim for payment of unpaid invoices against that company. The client company relied in defence on set-off against invoices it had itself issued.
The decision under appeal (CA Riom, 11 September 2024, No. 23/00450) rejected the plea of set-off and ordered the client company to pay the unpaid invoices. The lower court judges noted that the application for set-off had been made more than five years after that company issued its invoices, and inferred from this that it was time-barred. According to the ground of appeal, that set-off had been invoked on 1 July 2022.
The commercial chamber quashes that decision in part and holds that the effective date of set-off is the date on which its conditions are met, not the date on which it is invoked (free translation):
It follows from this provision that set-off produces its extinguishing effect on the date on which its conditions are met and not on the date on which it is invoked.
The first ground of appeal did not give rise to a specially reasoned decision, pursuant to Article 1014, paragraph 2, of the French Code of Civil Procedure. The quashing leaves in place the rejection of the plea of nullity of the writ of summons (assignation) as well as the substitution of the name of the original claimant party. The case is remitted to the cour d'appel de Bourges.
Set-off of a time-barred claim: what may the debtor rely on?
A company sued for payment retains the ability to rely on its own claim, even if the limitation period for that claim had expired on the day it invokes it. The opposite reasoning amounted to requiring the debtor to bring a claim for payment within the limitation period in order to be able one day to set off. The decision under review rejects that reading: the reciprocal extinguishment of the debts occurred earlier, as soon as the conditions for set-off were met.
The practical consequence is immediate for ongoing business relationships, where each party invoices the other. A company that has stopped claiming its own invoices has not necessarily lost the right to rely on them in defence. It must still show that the conditions for set-off were met on a date when its claim could produce that effect. It is that date which now structures the discussion, and not the procedural timetable.
What Article 1347 of the French Civil Code lays down
The decision settles the effective date of set-off; it does not relieve the party invoking it of the need to establish that its conditions were met. The commercial chamber rules on the basis of Article 1347, paragraph 2, of the French Civil Code, in the version resulting from the ordinance of 10 February 2016. The provision fixes the moment of the extinguishing effect; the set-off must still be invoked, but that invocation does not shift that moment.
The appeal to the Cour de cassation (France's highest civil court) drew from this mechanism a specific consequence as to the timing of the invocation:
set-off operates by operation of law on the date on which the conditions are met, subject to having been invoked, and that invocation may take place at any time
What remains open falls to the court of remittal. The decision under review does not fix the date on which the conditions for set-off were met between the two parties, nor the final outcome of the claim for payment. The cour d'appel de Bourges will rehear the case on the points quashed. As the case law stands at 1 July 2026, the solution invites parties to reason on the chronology of the reciprocal claims.
What steps to take where invoices run both ways?
The useful step is to reconstruct the chronology of the reciprocal claims before concluding that an old invoice is definitively lost. A business sued for payment is well advised to check whether it itself held a claim against its contracting party and on what date that claim became due. That check determines the scope of the plea of set-off, which must be raised in the proceedings.
- Identify, for each reciprocal invoice, its date of issue and its due date.
- Keep the documents establishing the existence and the amount of the claim relied on by way of set-off.
- Expressly raise the plea of set-off in defence to the claim for payment.
- Distinguish the date on which the conditions for set-off were met from the date on which it is invoked.
The points to document before paying
Before settling an invoice claimed by a commercial partner, a company should check whether it holds a reciprocal claim against that partner. The age of that claim is not enough to rule out set-off, since the extinguishing effect attaches to the date on which the conditions were met. Documenting the due dates on both sides is therefore the centrepiece of the file. This analysis depends on the circumstances of each contractual relationship and on the documents available.
Frequently Asked Questions
Can set-off still be relied on where the invoice relied on is old?
Yes. The age of the invoice relied on does not in itself bar set-off. Under the decision of 1 July 2026, set-off produces its extinguishing effect on the date on which its conditions are met, not on the date on which a party invokes it. The discussion therefore concerns the date on which those conditions were met. Set-off must still be raised in the proceedings and the claim relied on must be established.
On what date are reciprocal debts treated as extinguished?
On the date on which the conditions for set-off are met. The decision under review states this on the basis of Article 1347, paragraph 2, of the French Civil Code, in the version resulting from the ordinance of 10 February 2016. Later invocation does not move that moment: it merely allows a party to rely on an effect already produced. That effective date becomes the central element of the case put before the court.
What happens to the dispute when the Cour de cassation sets aside a refusal of set-off?
The dispute returns to a different court of appeal, here the cour d'appel de Bourges, which rehears the points quashed. Quashing does not decide the merits: it censures the reasoning adopted. The outcome therefore remains open, since the court of remittal must assess whether the conditions for set-off were met and on what date. Points not quashed, such as the rejection of the plea of nullity of the writ of summons, remain final.
Must a business sue on its invoice in order to set it off later?
Bringing a claim for payment is not the only way to give value to a claim against a partner. In principle, set-off operates as a defence which the debtor being sued may raise in the proceedings brought against it. It must nonetheless be invoked and rest on a claim whose existence and amount are established. A purely passive approach, by contrast, creates evidential difficulties.
How can the existence and the due date of a reciprocal claim be proved?
Proof rests on the contractual and accounting records of the business relationship. Contracts and purchase orders, invoices issued, payment terms, account statements, reminders and written exchanges make it possible to place each claim in time. Accounting entries and acknowledgements by the contracting party, even implicit ones, usefully complete the file. The better documented the chronology of the reciprocal claims, the stronger the defence based on set-off.