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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.

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