Where the obligations are to pay money in different currencies, the right of set-off may be exercised, provided that both currencies are freely convertible and the parties have not agreed that the first party shall pay only in a specified currency.
1. Convertible currencies
Payments in different currencies are not performances of the same kind as required by Article 8.1. However, if the payments are to be made in currencies that are both convertible, set-off may nevertheless be exercised. According to Article 6.1.9, if there is no agreement to the contrary, payment may be made by the obligor in the currency of the place for payment, if this currency is convertible. On the contrary, since the relative value of a currency that is not freely convertible cannot be readily ascertained for the purpose of set-off, set-off cannot be used to impose payment in such a currency on the other party.
1. A, a wine producer in country X, sells 5,000 bottles of wine for USD 200,000 to B, a cork producer. B sells 100,000 corks to A for the price of 100,000 livros, which is the currency of the country where corks are produced and which is not convertible. A asks B for payment of the USD 200,000. B may not set off the 100,000 livros against the USD 200,000.
2. Currency specified by contract
If a contract expressly requires a party to pay in a specified currency, and if the other party has to perform its own obligation in a currency different from that currency, it will not be able to set off its own obligation against the other party’s obligation.
2. A sells B products for USD 100,000. The sales contract expressly provides that the price is to be paid by the buyer in US dollars. B, an Asian carrier, is A’s obligee for an unpaid invoice for carriage charges which must be paid in Korean Won. A requires payment of the USD 100,000. B, who contractually is obliged to pay the price of the products in US dollars, is not allowed to set off its obligation against the obligation of A to pay the carriage charges.