contracts, civil law. When two persons are equally
indebted to each other, there takes place a compensation between them, which
extinguishes both debts. Compensation is, therefore, a reciprocal liberation
between two persons who are creditors and debtors to each other, which liberation
takes place instead of payment, and prevents a circuity. Or it may be more
briefly defined as follows; compensatio est debiti et crediti intter se
2. Compeasation takes places, of course, by the more operation of law, even
unknown to the debtors the two debts are reciprocally extinguished, as soon
as they exist simultaneously, to the, amount of their respective sums. Compensation
takes place only between two debts, having equally for their object a sum
of money, or a certain quantity of consumable things of one and the same
kind, and which are equally liquidated and demandable. Compensation takes
place, whatever be the cause of either of the debts, except in case, 1st.
of a demand of restitution of a tbing of which the owner has been unjustly
deprived; 2d. of a demand of restitution of a deposit and a loan for use;
3d. of a debt which has for its cause, aliments declared not liable to seizure.
Civil Code of. Louis. 2203 to 2208. Compensation is of three kinds: 1. legal
or by operation of law; 2. compensation by way of exception; and, 3. by
reconvention. 8 L. R. 158; Dig. lib. 16, t. 2; Code, lib. 4, t. 31; Inst.
lib. 4, t" 6, s. 30; Poth. Obl. partie. 3eme, ch. 4eme, n. 623; Burge on
Sur., Book 2, c. 6, p. 181.
3. Compensation very nearly resembles the set-off (q. v.) of the common
law. The principal difference is this, that a set-off, to have any effect,
must be pleaded; whereas compensation is effectual without any such plea,
only the balance is a debt. .2 Bouv. Inst. n. 1407.
Source: Bouviers Law Dictionary 1856 Edition
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