mutual credit

mutual credit
A knowledge on both sides of an existing debt due to one party, and a credit by the other party, founded on, and trusting to such debt, as a means of discharging it. This definition is not quite broad enough to cover all the cases, where there being a connection between the demands, equity acts upon it, and allows a setoff under particular circumstances. Courts of equity deviate from the strict rule of mutuality when the justice of the particular case requires it. Scott v Armstrong, 146 US 499, 507, 36 L Ed 1059, 1062, 13 S Ct 148. See mutuality of parties and demands.

Ballentine's law dictionary. . 1998.

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