The law does not allow counterparties to use other people`s liabilities to equalize unrelated liability.  All forms of action require reciprocity between claim and cross-claim. This protects property rights both inside and outside, especially in that a non-owner does not benefit from bankruptcy. how contractual compensation can be used to extend the compensation available under common law (i.e. how it is exempt from certain restrictions on other main types of compensation) Compensation is used by a debtor to reduce the overall liability of a debt claimed by a creditor. In essence, the plaintiff must credit the defendant with the sum found in his appeal against the defendant. If the debtor is subject to a real obligation, it is a reduction in the amounts against the creditor. Innovation compensation, also known as rolling netting, involves amending contracts in agreement with the parties. This erases previous claims and replaces them with new claims. Two main examples of redistricting rules are described below. These complement the financial compensation rules set by professional associations and the European Union through the financial security directives. Contracting parties sometimes agree on a contractual right of compensation, z.B when they have an ongoing business relationship; They may also accept the exclusion of flight rights. With respect to commercial transactions, late payment is an important right for a party that invokes breach of contract as a defence against a right to payment under this contract.
Contracting parties can also be compensated in their written contract by extending or limiting the scope of compensation rights between them. For more information, see Practical Note: Contract Compensation. An efficient local network system is considered crucial for an efficient financial market.  The closure of the compensation is different from that of Novation sing, in that it covers all outstanding obligations of the party under a framework contract used by the ISDA. Traditionally, they only work in cases of late payment or insolvency. In the case of a counterparty bankruptcy or other relevant delay event, as indicated in the agreement in question, when expedited (i.e. implemented), all transactions or any type of contract are at market value or, if the contract is otherwise stated or if it is not possible to obtain a market value, the amount of loss that the non-failing party suffered as a result of the replacement of the contract in question. , charged (i.e. compensated). The alternative would allow the liquidator to choose which contracts should be applied or not (and thus potentially « cherry pickers »).  There are international jurisdictions in which the applicability of netting in the event of bankruptcy has not been subject to legal review.
[Citation required] The key elements of the « close-out netting » are: in certain circumstances, compensation is created between two parties who owe each other financial debts.