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- (law) The act of cancelling part of a claim by deducting a smaller claim which the claimant owes to the defendant.
- The Nuttall Encyclopedia
De`fal*ca"tion (?), n. [LL.
defalcatio: cf. F. défalcation.]
1. A lopping off; a diminution; abatement;
deficit. Specifically: Reduction of a claim by deducting a
counterclaim; set- off. Abbott.
2. That which is lopped off, diminished, or
3. An abstraction of money, etc., by an
officer or agent having it in trust; an embezzlement.
- Webster's Unabridged Dictionary (1913)
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The correct spelling of this word ought to be: Defalcation
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