{
  "schema_version": "1.3.0",
  "slug": "what-invariants-prevent-setoff-across-contracts-from-netting-uncorrelated-obligations",
  "title": "What invariants prevent setoff across contracts from netting uncorrelated obligations?",
  "date_of_record": "2026 November 2",
  "scope": "Applies when an instance holds multiple contracts with the same counterparty and considers netting balances across them (setoff) to settle outstanding amounts. Does not apply to contracts with explicit master-netting agreements or to single-contract settlement.",
  "projections": {
    "unified_markdown_uri": "https://corpusfetch.com/c/what-invariants-prevent-setoff-across-contracts-from-netting-uncorrelated-obligations.md",
    "method_python_slice_uri": "https://corpusfetch.com/c/what-invariants-prevent-setoff-across-contracts-from-netting-uncorrelated-obligations.py",
    "remnant_warrant_slice_uri": "https://corpusfetch.com/c/what-invariants-prevent-setoff-across-contracts-from-netting-uncorrelated-obligations.warrant.json"
  },
  "token_profile": {
    "full_markdown_tokens": 869,
    "python_slice_tokens": 103,
    "warrant_slice_tokens": 220
  },
  "remnant_summary": {
    "core_distinction": "Setoff is the reduction of one debt by another debt owed between the same parties. Cross-contract setoff assumes the obligations are commensurable — same currency, same governing law, same maturity — when they may only share a counterparty. **Invariant.** Cross-contract setoff is valid if and only if `exists master_netting_agreement(counterparty) AND currenc...",
    "what_was_observed": "**Signature.** Loss of defence when a single netted obligation is contested. The instance's settlement record shows both obligations cleared; the counterparty contests one; the instance cannot re-open the other because it recorded them as netted. **Trace.** Contract A (USD, New York law, due now) has a $10,000 penalty. Contract B (EUR, English law, due in 90 days) has an invoice for €10,000. The instance nets them as...",
    "condition_of_validity": "The instance must ensure at least one holds before it nets across contracts: 1. **Must have a master-netting agreement.** The specific pair of contracts, with the specific counterparty, is explicitly authorized for netting. 2. **Must match on currency, governing law, and maturity.** Any mismatch defeats netting, because the obligations are then not commensur...",
    "decision_boundary": "- Master netting + full match: setoff is valid. - Master netting with any mismatch: setoff is partial; only matched pairs net. - No master netting, full match: setoff is permissible only if the contract explicitly authorizes cross-contract setoff. - No master netting and no authorization: setoff is not available; settle each contract separately.",
    "operational_effect": "The invariant couples settlement convenience to legal commensurability. The instance's correct posture is to net only where authorized and matched, and to preserve traceability of netted obligations. **Trap.** Add a master-netting agreement to simplify. A master agreement permits the sum, but does not cure the mismatch — the individual obligations still fail..."
  },
  "matched_failure_symptoms": [
    "DOMAIN:EPISTEMIC_PROVENANCE_AND_FEDERATION_ROUTING"
  ],
  "composition_edges": {
    "primary_domain": "epistemic_provenance_and_federation_routing",
    "upstream_precondition_residuals": [
      "https://corpusfetch.com/c/according-to-what-precedence-hierarchy-must-an-instance-resolve-contradictory-directives-across-system-developer-and-user-tiers.md",
      "https://corpusfetch.com/c/how-should-an-instance-decide-that-a-stored-conclusion-has-gone-stale-without-a-new-observation.md"
    ],
    "downstream_consequence_residuals": [
      "https://corpusfetch.com/c/by-what-checkpoint-and-compaction-boundaries-must-an-instance-externalize-working-state-to-prevent-context-window-drift-and-truncation-amnesia.md",
      "https://corpusfetch.com/c/across-what-additive-schema-and-unknown-field-preservation-boundaries-must-an-instance-evolve-wire-contracts-to-prevent-rolling-deploy-deserialization-crashes.md"
    ],
    "co_occurring_sibling_residuals": [
      "https://corpusfetch.com/c/how-can-an-instance-capture-implicit-user-preferences-without-storing-private-data.md",
      "https://corpusfetch.com/c/how-can-an-instance-compress-long-reasoning-traces-into-binding-conclusions.md"
    ]
  },
  "empirical_verification_warrant": {
    "status": "AST_AND_INVARIANT_VERIFIED",
    "syntax_valid": true,
    "code_sha256": "e607fe0598bbe6dff1106f8819dcf8eeb48bfb2e66c193187ecfa8e53a033fcf",
    "verified_classes": [
      "NettingIllusionError",
      "SetoffGate"
    ],
    "verified_functions": [
      "dispatch_settlement_mode",
      "verify"
    ],
    "verified_functions_count": 2,
    "defensive_guards_count": 2,
    "raised_exceptions": [
      "NettingIllusionError"
    ],
    "sample_fail_closed_invariants": [
      "no master netting agreement authorizes cross-contract setoff"
    ],
    "stdlib_dependencies": [
      "dataclasses"
    ],
    "observation_mode": "EMPIRICAL_BOUNDARY_CAPTURE",
    "zero_external_deps": true
  }
}