Business, Legal & Accounting Glossary
n. a retaliatory claim by a defendant against a plaintiff in a lawsuit included in the defendant’s answer and intending to off-set and/or reduce the amount of the plaintiff’s original claim against the defendant. For example, Hotdog Products sues Barbecue Bill’s Eatery for $40,000 for meat delivered to Bill’s but not paid for, and Bill counterclaims that Hotdog owes him $20,000 for a load of bad chicken livers, so Hotdog is only entitled to $20,000. In many states the counterclaim is no longer allowed, in which case a cross-complaint, which is a separate complaint, must be filed by the defendant, but as part of the same lawsuit. On the other hand, in federal cases, if the defendant believes he/she/it has a legitimate counterclaim to reduce damages it must be alleged (stated) in the answer or it is barred from being considered.
A defendant’s court papers that seek to reverse the thrust of the lawsuit by claiming that it was the plaintiff — not the defendant — who committed legal wrongs, and that as a result, it is the defendant who is entitled to money damages or other relief. Usually filed as part of the defendant’s answer — which also denies plaintiff’s claims — a counterclaim is commonly but not always based on the same events that form the basis of the plaintiff’s complaint. For example, a defendant in an auto accident lawsuit might file a counterclaim alleging that it was really the plaintiff who caused the accident. In some US states, the counterclaim has been replaced by a similar legal pleading called a cross-complaint. In other states and in federal court, where counterclaims are still used, a defendant must file any counterclaim that stems from the same events covered by the plaintiff’s complaint or forever lose the right to do so. In still other states where counterclaims are used, they are not mandatory, meaning a defendant is free to raise a claim that it was really the plaintiff who was at fault either in a counterclaim or later as part of a separate lawsuit.
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This glossary post was last updated: 27th April, 2020 | 0 Views.