Short answer: If your company is sued for an unpaid invoice but the claimant owes you money or caused you loss, your solicitor can plead a set-off as a defence and a counterclaim for the rest. Under the Rules of Court 2021, both go in with the defence, due 21 days after the statement of claim is served in Singapore.
Counterclaim and set-off in Singapore are the two tools a company uses when a supplier, contractor or customer sues for money while the company says the claimant delivered defective work, overcharged, or owes it money on another deal. This guide explains the difference, the deadlines, no set-off clauses and what to prepare for your law firm. If you have only received a demand letter so far, start with our guide on responding to a lawyer’s letter of demand.
Key facts at a glance
- A defendant served in Singapore must file and serve its defence within 21 days after the statement of claim is served (Rules of Court 2021, Order 6, Rule 7(1)).
- A counterclaim must be filed and served together with the defence, in Form 13 (Order 6, Rule 8).
- The claimant then has 14 days to file a defence to the counterclaim, or risk default judgment on it (Order 6, Rule 9).
- For limitation purposes, a set-off or counterclaim is treated as a separate action started on the same date as the claimant’s action (Limitation Act 1959, section 31).
- If a counterclaim in the Magistrate’s Court exceeds the S$60,000 limit, any party may apply to transfer it, or the whole case, to the District Court (State Courts Act 1970, section 54F).
- The Court of Appeal has held that a no set-off clause can be subject to the reasonableness test in the Unfair Contract Terms Act 1977, where that Act applies.
Raffles Corporate Services works with a panel of experienced Singapore law firms who offer cost-effective and efficient legal service and advice. This article is general information only and is not legal advice.
What is the difference between a counterclaim and a set-off?
A set-off is a defence: it reduces or extinguishes the amount the claimant can recover. A counterclaim is your company’s own claim against the claimant, decided in the same action, and it can result in a judgment in your favour if it is worth more than the claim.
In practice, lawyers often plead both. If the supplier claims S$40,000 and your company says defective work cost it S$55,000 to fix, the first S$40,000 can be raised as a set-off to defeat the claim, and the remaining S$15,000 is pursued as a counterclaim.
| Type | When it applies | Typical example |
|---|---|---|
| Legal set-off | Both claims are liquidated or ascertainable with certainty, due and payable, and mutual (same parties, same capacity). They need not be connected. It operates only once litigation has begun. | The supplier sues for S$20,000 and separately owes you S$8,000 on a rebate invoice. |
| Equitable set-off | The cross-claim is so closely connected with the claim that it would offend one’s sense of fairness or justice to enforce one without regard to the other. It need not be a fixed sum or arise under the same contract. | A contractor sues for a progress payment; you say the same work was defective. |
| Contractual set-off | The contract gives a right to deduct cross-claims. | Your terms let you deduct liquidated damages from the price. |
The requirements for legal set-off are set out in Hayate Investment Co Ltd v ManagementPlus (Singapore) Pte Ltd [2012] SGHCR 3 (unreported). The equitable set-off test comes from Abdul Salam Asanaru Pillai v Nomanbhoy & Sons Pte Ltd [2007] 2 SLR(R) 856. If the claimant is in insolvent liquidation or judicial management, a separate statutory regime applies; see our guide to insolvency set-off in Singapore.
Which laws govern counterclaims and set-off in Singapore?
The procedure is in Orders 6 and 9 of the Rules of Court 2021, limitation in the Limitation Act 1959, court limits in the State Courts Act 1970, and no set-off clauses in contract law and sometimes the Unfair Contract Terms Act 1977.
| Source | What it says |
|---|---|
| Rules of Court 2021, Order 6, Rules 6 to 10 | Deadlines for the notice of intention to contest, defence, counterclaim and defence to counterclaim; further pleadings only with the court’s approval |
| Rules of Court 2021, Order 9, Rule 17 | Summary judgment, including on a counterclaim, and stay of enforcement pending a counterclaim |
| Limitation Act 1959, section 31, with section 6 | A set-off or counterclaim is deemed a separate action, commenced on the date of the claimant’s action; contract claims have a 6-year limit |
| State Courts Act 1970, sections 2, 31, 52(1B), 54E and 54F | Limits of S$60,000 (Magistrate’s Court) and S$250,000 (District Court); both courts give effect to every legal or equitable defence and counterclaim; transfer of oversized counterclaims |
| Unfair Contract Terms Act 1977, sections 3, 11 and 13 | Reasonableness test for terms on one party’s written standard terms of business or in consumer dealings, extended to terms restricting remedies or procedure |
Who can raise a set-off or counterclaim, and when?
The defendant company raises both, and the deadline is the defence deadline: 21 days after the statement of claim is served in Singapore, or 5 weeks if served outside Singapore (Order 6, Rule 7). A counterclaim must be filed and served with the defence (Order 6, Rule 8(1)).
Three points decide whether your cross-claim belongs in the action:
- Mutuality. The cross-claim must be against the same company that is suing you. A debt owed by the claimant’s sister company, or owed to your parent company, is not mutual.
- Connection. An unconnected cross-claim that is not a fixed sum will not work as a set-off. You may still counterclaim, but the claimant may get judgment on its claim meanwhile.
- Time. Under section 31 of the Limitation Act 1959, your set-off or counterclaim is treated as started on the date the claimant began its action. A contract claim still within the 6-year period under section 6(1)(a) on that date is not barred just because your defence is filed later.
How do you raise a counterclaim and set-off in Singapore, step by step?
Your solicitor files a combined defence and counterclaim through eLitigation within the defence deadline, after a notice of intention to contest. Court proceedings are conducted by a Singapore Advocate and Solicitor acting for your company.
- Record the date and manner of service of the originating claim and the statement of claim, and diarise the 14-day and 21-day deadlines.
- Instruct a law firm immediately. Our guide for directors whose company has been sued covers the first steps.
- File and serve a notice of intention to contest within 14 days after the statement of claim is served (Order 6, Rule 6(1)).
- Quantify the cross-claim with supporting documents.
- File and serve the defence and counterclaim within 21 days after the statement of claim is served (Order 6, Rules 7 and 8). The set-off is pleaded in the defence; the counterclaim states the relief claimed.
- The claimant files its defence to the counterclaim within 14 days. If it fails to, your company may apply for judgment in default on the counterclaim (Order 6, Rule 9).
- Attend the case conference. No further pleadings beyond the defence or defence to counterclaim may be filed unless the court approves (Order 6, Rule 10).
- If the claimant applies for summary judgment, your company’s affidavit must contain all the evidence necessary or material to the defence, including the set-off (Order 9, Rule 17(4)).
What if the claimant applies for summary judgment?
A well-evidenced set-off is one of the main ways to resist it. Outside the simplified process, a claimant can apply after the defence is filed, generally within 28 days after it is served (Order 9, Rule 17(1) and (13)). The court may dismiss the application, give permission to defend, with or without conditions, or grant judgment (Rule 17(7)). A counterclaim that is not a set-off does not stop judgment on the claim, but the court may stay enforcement until the counterclaim is tried (Rule 17(9)). In the Magistrate’s Court, summary judgment is not available at all under the simplified process (Order 65, Rule 3). Our guide to summary judgment in Singapore explains the claimant’s side.
What if the counterclaim is bigger than the court’s limit?
Under section 54F of the State Courts Act 1970, where a Magistrate’s Court counterclaim goes beyond the S$60,000 limit, any party may apply to the District Court to transfer the whole case or just the counterclaim. Section 54E does the same above the S$250,000 District Court limit, with the General Division of the High Court. If only the counterclaim moves and the claimant wins, enforcement is stayed until the counterclaim is concluded, unless the court orders otherwise. If nobody applies, the lower court keeps the whole case.
Can a “no set-off” clause stop your company from deducting?
Often, yes. In Koh Lin Yee v Terrestrial Pte Ltd [2015] 2 SLR 497, the Court of Appeal held that clear words such as “without set-off” exclude both legal and equitable set-off. It also held that such a clause falls within the Unfair Contract Terms Act 1977 and is potentially subject to its reasonableness test. Three points follow from the judgment and the Act:
- The Act applies only where section 3 does: your company dealt as consumer, or on the other side’s written standard terms of business. Otherwise the clause is ordinarily upheld on contract principles.
- Where it applies, the party relying on the clause must show it is reasonable (section 11(5)), judged by what the parties knew or should have known when contracting (section 11(1)).
- On the facts, the court found the clause reasonable anyway, and refused a stay of execution pending the counterclaim because that would defeat the clause’s purpose.
If your contract says “without set-off”, plan on paying the invoice and pursuing the cross-claim separately, unless your solicitor advises otherwise.
What documents will the law firm need from your company?
The law firm needs evidence of both sides of the account: what the claimant says is owed, and what your company says the claimant owes or caused. In the Magistrate’s Court, every pleading must be served with a list and copies of the documents relied on and known adverse documents (Order 65, Rule 2), so assemble these before the defence is drafted.
| Document | Why it matters |
|---|---|
| Contract, quotation, purchase order and both sides’ standard terms | Shows the price, payment terms, any no set-off or liquidated damages clause, and whose terms govern |
| The claimant’s invoices and statement of account | Shows what is claimed and whether credits were already given |
| Defect reports, photos, inspection records and complaint emails | Proves the breach and the close connection needed for equitable set-off |
| Rectification quotes, replacement supplier invoices and proof of payment | Quantifies the cross-claim |
| Your own unpaid invoices to the claimant, credit notes or rebate calculations | Supports a legal set-off of a fixed sum |
| Ledger extracts and correspondence, including any offer of amicable resolution | Shows the net position, mutuality and compliance with Order 5 |
| Directors’ resolution authorising the defence and counterclaim | Confirms who instructs the law firm and can approve settlement |
How long does it take, and what does it cost?
The early deadlines are fixed by the Rules of Court; everything after the pleadings depends on case conferences, settlement and the court’s timetable. Official filing fees are small; solicitors’ fees are the main cost.
| Stage | Timing | Cost and assumptions |
|---|---|---|
| Notice of intention to contest | 14 days after the statement of claim is served in Singapore | Court fee S$10 under the simplified process (Magistrate’s Court); S$20 outside it, per the Singapore Courts’ guidance; Service Bureau charges extra |
| Defence and counterclaim | 21 days after the statement of claim is served in Singapore | S$10 each for the defence and counterclaim under the simplified process; S$20 each outside it |
| Claimant’s defence to counterclaim | 14 days after service of the defence and counterclaim | Paid by the claimant |
| Summary judgment application by either side | Generally within 28 days after the defence or defence to counterclaim is served | Not available in the Magistrate’s Court; solicitors’ fees for affidavits and the hearing |
| Your own solicitor’s fees | Throughout | Quoted by the law firm; driven by the size of the counterclaim, expert evidence on defects and whether the case goes to trial |
Assumptions: a Singapore company served in Singapore, with no challenge to jurisdiction or arbitration clause. The full list of court fees is in the Fourth Schedule to the Rules of Court 2021, so confirm the current amount for your court before filing. The court generally orders costs in favour of the successful party (Order 21, Rule 3(2)), but may reduce a winner’s costs for a failed issue or for ignoring its duty to consider amicable resolution (Order 21, Rule 4).
What does the company secretary prepare, and what does the solicitor file?
Your company secretary or corporate service provider (CSP) assembles the corporate and accounting evidence. The Singapore Advocate and Solicitor advises on which set-offs are available, drafts and files every court document, and appears in court.
| Company secretary or CSP | Singapore Advocate and Solicitor |
|---|---|
| Directors’ resolution to defend, counterclaim and appoint the law firm | Advice on legal, equitable and contractual set-off and on any no set-off clause |
| ACRA business profiles of both companies, to confirm the correct parties | Notice of intention to contest, defence and counterclaim |
| Reconciled ledger extract and a net-position schedule | Limitation advice and the transfer application, if needed |
| Indexed bundle of contracts, invoices, defect records and correspondence | Affidavits for summary judgment, case conferences and trial |
| Accounting entries for the disputed payable and any settlement | Settlement terms and any consent judgment |
Raffles Corporate Services does not give legal advice or act in court; a law firm from our panel handles the proceedings. If you are unsure whether to withhold payment, speak to a lawyer before the defence deadline.
What happens after the court decides, or the case settles?
The court gives judgment on the claim and the counterclaim, and in practice the net amount is what changes hands, together with any costs order. No ACRA lodgement is normally needed for a commercial judgment or settlement.
The work is in the books. Until the dispute is resolved, keep the claimant’s invoice as a payable and do not net it against your cross-claim in the ledger; ask your accountant how to treat or disclose an uncertain counterclaim at year end. Once there is a judgment or signed settlement, record the agreed reduction, any amount received, interest and legal costs, and file the order or agreement with the ledger. If you are GST-registered and the price of a taxable supply is reduced, ask your accountant whether a credit note is needed. The free tools on our site help with the year-end tax numbers.
What are the common mistakes?
Most problems come from withholding payment without a legal basis, or raising the cross-claim too late.
- Filing a bare defence and planning to “sue them back later”. The counterclaim belongs with the defence under Order 6, Rule 8(1); adding it later means asking the court to allow an amendment.
- Assuming any money the claimant owes can be deducted. An unconnected, unliquidated claim is not a set-off, and judgment on the claim may follow.
- Netting debts of group companies, which lack mutuality.
- Ignoring a no set-off clause in the contract or in the claimant’s standard terms.
- Under-documenting the defects, which leaves the counterclaim exposed to a summary judgment application.
Frequently asked questions
Can my company counterclaim for more than the claimant is suing for?
Yes. A counterclaim is an independent claim. If it exceeds the court’s limit, any party can apply to transfer it under section 54E or 54F of the State Courts Act 1970.
Can we just withhold payment of the invoice instead of going to court?
Withholding is a commercial decision with legal risk. If the deduction is not justified, the supplier can sue for the full amount, interest and costs. Take advice before withholding.
What if the claimant does not respond to our counterclaim?
If the claimant does not file a defence to the counterclaim within 14 days, your company may apply for judgment in default on the counterclaim (Order 6, Rule 9(3)).
Can the claimant get summary judgment against us in the Magistrate’s Court?
No. Under the simplified process in Order 65 of the Rules of Court 2021, no application for summary judgment may be made in a Magistrate’s Court originating claim (Order 65, Rule 3). Your set-off and counterclaim are tested at case conferences and, if needed, at trial.
Need help with this?
Raffles Corporate Services can handle the ACRA filings, compliance documentation and records for you, and where court proceedings or legal advice are needed, we work with a panel of experienced Singapore law firms who offer cost-effective and efficient legal service and advice.
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Last reviewed: 3 November 2026. The Editorial Team, Raffles Corporate Services.