In January 2011 Department Store entered into a sales contract with Appliance Co to buy 10
In the same month, Appliance Co intended to rent a space of 100 m2 from Department Store to exhibit its other appliance products. For this purpose the two parties entered into a rental agreement and agreed upon the following terms and conditions: the term of rental would be one year as from January to December 2011; the total rental would be RMB 400,000 yuan and be paid RMB 100,000 yuan quarterly within the first 10 days of January, April, July and October.
At the end of March 2011 Appliance Co sent Department Store a written notice, stating that it would set off its rental of RMB 200,000 yuan for the second and third instalments with the remaining price of 200,000 yuan for the refrigerators.
Required:
Answer the following questions in accordance with the relevant provisions of the Contract Law, and give your reasons for your answer:
(a) state the nature and different forms of set-off as presented by Appliance Co to Department Store; (4 marks)
(b) state the conditions to be met by Appliance Co when it was claiming the set-off of credit and debt with Department Store. (6 marks)