Where cross-demands for money have existed between persons at any point in time when neither demand was barred by the statute of limitations, and an action is thereafter commenced by one such person, the other person may assert in the answer the defense of payment in that the two demands are compensated so far as they equal each other, notwithstanding that an independent action asserting the person's claim would at the time of filing the answer be barred by the statute of limitations. If the cross-demand would otherwise be barred by the statute of limitations, the relief accorded under this section shall not exceed the value of the relief granted to the other party. The defense provided by this section is not available if the cross-demand is barred for failure to assert it in a prior action under Section 426.30. Neither person can be deprived of the benefits of this section by the assignment or death of the other. For the purposes of this section, a money judgment is a "demand for money" and, as applied to a money judgment, the demand is barred by the statute of limitations when enforcement of the judgment is barred under Chapter 3 (commencing with Section 683.010) of Division 1 of Title 9.
§ 431.70.Defense of Payment In that Two Demands Compensated So Far As They Equal Each Other
Title 6. Of the Pleadings In Civil Actions · Chapter 3. Objections to Pleadings; Denials and Defenses · Article 2. Denials and Defenses · Last amended 1983 · Last verified July 28, 2026
In one sentenceSection 431.70 lets a defendant plead a setoff defense for cross-demands that were both timely when they coexisted, even though an independent suit on the defendant's own demand would now be barred by the statute of limitations.
Full Text of § 431.70
Plain-English Summary
Section 431.70 preserves an old equitable idea: when two people each owe the other money, and neither demand was time-barred while they coexisted, the passage of time should not let one side collect in full while the other loses its own claim to the clock.
Once one person sues, the other may raise, as a defense, that the two demands are compensated so far as they equal each other — even if an independent action on that person's own demand would now be barred by the statute of limitations. If the cross-demand would otherwise be time-barred, the relief this defense provides cannot exceed the value of the relief granted to the other party; the defense offsets, it does not create net recovery. This defense is unavailable, however, if the cross-demand was already barred for failure to assert it in a prior action under § 426.30's compulsory cross-complaint rule, and it survives the assignment or death of either person. The section also treats a money judgment as a "demand for money," measuring its own limitations bar under Chapter 3 (commencing with § 683.010) of Division 1 of Title 9.
Frequently Asked Questions
Can a defendant still use an otherwise time-barred claim as a setoff in California?
Yes — § 431.70 allows the defense of payment by compensation between cross-demands that were both timely when they coexisted, even if an independent suit on the defendant's own demand would now be barred by the statute of limitations.
Is there a cap on the relief available under the § 431.70 setoff defense?
Yes. If the cross-demand would otherwise be time-barred, the relief the defense provides cannot exceed the value of the relief granted to the other party.
When is the § 431.70 defense unavailable?
It is unavailable if the cross-demand was already barred for failure to assert it in a prior action under § 426.30's compulsory cross-complaint rule.
Amendment History
Amended by Stats. 1982, Ch. 497, Sec. 32. Operative July 1, 1983, by Sec. 185 of Ch. 497.
Source & verification. Section text is reproduced verbatim from
the Deering's California Codes Annotated / vLex. Enacted by the California Legislature.
Last verified July 28, 2026.
· Official source
Also known as: setoff defense statute of limitations californiacross-demands compensation defense