A retail store owner sues a manufacturer for a shipment of defective clocks. Regardless of the validity of that suit, the manufacturer could counterclaim against the store owner if, for example, the owner owed the manufacturer money for past shipments. Both the storeowner’s and the manufacturer’s claims would then be decided by the courts.
In federal practice, a COMPULSORY COUNTERCLAIM arises out of the subject matter of the opposing party’s claims, and unless the defendant makes such a counterclaim in the suit that has been brought against him or her, he or she may be barred from ever raising that claim again. A PERMISSIVE COUNTERCLAIM is any other counterclaim and may be made by the defendant in the action that has been brought against him or her or in a subsequent suit. See setoff. Compare cross-claim.
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