THE SHORT ANSWER
A claim about Project A does not explain a deduction from Project B by itself. Check the actual parties, whether the contract permits cross-contract set-off, what counts as a debt, and any notice or dispute procedure. Keep the invoice balance and the client's counterclaim separate until the basis and arithmetic are clear.
You invoiced $1,200 for a completed website. The client sends $800 and says the remaining $400 covers a problem on last month's design project. You disagree that anything was owed on the older job. Which contract should you read?
Read both, and keep the two balances separate. Set-off describes reducing a payment by a countervailing amount claimed in the other direction. The label does not establish that the amount is owed, that these parties can use it, or that this deduction is permitted.
This guide is a reading and record-keeping method for commercial contracts. It does not decide whether a deduction is legally available in your jurisdiction. Contractual wording, other legal rights of set-off, mandatory rules and the facts can all matter.
Build a two-project ledger
Here is a fictional example. The client alleges a $400 correction cost on Project A. The freelancer disputes responsibility. Project B has a separate $1,200 invoice.
| Item | What is documented | What remains disputed |
|---|---|---|
| Project A | Design work, contract A and completion messages | Whether a defect existed, who caused it and whether $400 is owed |
| Project B | Contract B, $1,200 invoice and $800 received | Whether the $400 shortfall can be taken from this invoice |
| Client's calculation | $1,200 minus $400 equals $800 | The legal and contractual basis for subtracting the $400 |
The arithmetic works. The justification is still unresolved. Do not quietly mark Project B “paid in full” just because the transfer matches the client's calculation. Equally, do not present the alleged correction cost as an admitted debt in your own records.
If the real issue is that the client has not been paid by their customer, use the separate pay-when-paid guide. If they want you to sign fresh terms before paying an old invoice, use the new-contract checklist.
Read four boundaries in the clause
1. Who owes whom?
Write down the exact legal names on each agreement and invoice. A trading name, parent company, subsidiary and individual owner are not automatically interchangeable. Look for wording about affiliates, group companies, assignment or debts owed to third parties.
2. Which agreements does it reach?
Compare these fictional snippets:
- “Amounts due under this agreement” points you toward one agreement.
- “Amounts due under this or any other agreement between the parties” explicitly reaches more than one.
- “Any loss claimed by us or a group company” introduces further questions about claims, evidence and which entities benefit.
These are different drafting choices, not a universal ranking of enforceability. No set-off clause also does not automatically mean no legal right of set-off exists. That question needs the applicable law.
3. What kind of amount qualifies?
Does the wording require a sum to be due, agreed, undisputed, finally determined, or merely claimed? Is a speculative estimate being treated like an established debt? Find the definition and any dispute procedure, not just the paragraph headed “Payment.”
4. What process applies?
Look for advance notice, reasons, supporting documents, a deadline to object and a requirement to pay undisputed sums. Record what actually happened beside what the clause requires.
A real example of deliberately broad wording
The UK government's Short Form Contract, version 1.5A, checked on 23 October 2026, illustrates why scope matters. Its payment provisions permit the buyer to retain or set off an amount owed by the supplier under that contract or another agreement between those same parties, provided notice and reasons are given. A separate provision addresses paying undisputed invoiced amounts and resolving disputes.
This is a public-procurement template, not the default rule for private freelance projects. It demonstrates that cross-contract reach and procedural requirements can be written explicitly. Do not copy its buyer rights into your own situation unless your agreement actually contains them or another applicable basis exists.
Ask for the missing explanation
Send a factual request before turning the exchange into an argument about the whole relationship:
Invoice [B/reference] totals [amount]. We received [amount] on [date], leaving [balance]. You described the difference as a deduction relating to [Project A]. Please identify the contractual or other basis relied on, the exact parties and agreements involved, an itemized calculation, and the supporting evidence. We dispute [specific point]; this request does not accept that the claimed amount is owed. Please also confirm your position on payment of the undisputed balance and the applicable dispute process.
Keep this proportionate. Replace the bracketed material and remove assertions you cannot support. Save the reply, bank record, relevant terms and project evidence in one place.
Before accepting a settlement or stopping work
Check whether a proposed “full and final” payment closes more than this invoice. A release can affect both projects, future claims or intellectual-property handover. If the job has ended, compare the final-invoice worksheet with the continuing-obligations checklist.
Do not assume you may suspend ongoing work, revoke a licence or take money back merely because you dispute a deduction. Those actions have their own terms and consequences. For a substantial or escalating dispute, take the two-project ledger and exact clauses to someone who can assess the governing law.
An AI first pass can help locate cross-references and organize questions. It cannot establish that the counterclaim is true, collect the debt or determine the outcome of a dispute.
Put your own contract in context.
Starting notes from this guide are included; edit them before submitting.
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