COMPENSATION. In Chancery Practice. Something to be done for or paid to a per son of equal value with something of which he has been deprived by the acts or negli gence of the party so doing or paying.
When a simple mistake, not a fraud, ef fects a contract, but does not change its essence, a court of equity will enforce it, upon making compensation for the error. "The principle upon which courts of equity act," says Lord Chancellor Eldon, "is by all the authorities brought to the true standard, that though the party had not a title at law, because he had not strictly complied with the terms so as to entitle him to an action (as to time, for instance), yet if the time, though introduced (as some time must be fixed, where something is to be done on one side, as a consideration for something to be done on the other), is not of the essence of the contract, a material object, to which they looked in the first conception of it, even though the lapse of time has not arisen from accident, a court of equity will compel the execution of the contract upon this ground, that one party is ready to perform, and that the other may have a perforniance in sub stance if he will permit it ;" 13 Ves. Ch. 287. See 10 id. 505; 13 id. 73, 8r, 426; 6 id. 575; 1 Cox, Ch. 59.
In Civil Law. A reciprocal liberation be tween two persons who are both creditors and debtors of each other. Est detnti et crediti inter se contributio. Dig. 16. 2. 1.
It resembles in many respects the common-law set-off. The principal difference is that a set-off must be pleaded to be effectual; whereas com pensation is effectual without any such plea. See 2 Bouvier, Inst. n. 1407.
It may be legal, by way of exception, or by reconvention; Blanchard v. Cole, 8 La. 158; 8 Dig. 16. 2; Code, 4. 31 ; Inst. 4. 6. 30; Burge, Suret. b. 2, c. 6, p. 181.
It takes place by mere operation of law, and extinguishes reciprocally the two debts as soon as they exist simultaneously, to the amount. of their respective sums. It 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. It takes place whatever be the cause of the debts, except in case, first, of a demand of restitution of a thing of which the owner has been unjustly de prived; second, of a demand of restitution of a deposit and a loan for use; third, of a debt which has for its cause aliments declar ed not liable to seizure. La. Civ. Code 2203 2208. See Dorvin v. Wiltz, 11 La. Ann. 520; Stewart v. Harper, 16 La. Ann. 181.
As to taking property, see EMINENT Do MAIN.
In Criminal Law. Recrimination, which see.