Required drafting (see Section 12.3 of SoPC4) as follows:

46.1 The Contractor shall not be entitled to retain or set off any amount due to the Authority by it, but, subject to paragraph 2, part 7 of Schedule 17 (Compensation on Termination), the Authority may retain or set off any amount owed to it by the Contractor under this Contract which has fallen due and payable against any amount due to the Contractor under this Contract.93

46.2 If the payment or deduction of any amount referred to in Clause 46.1 above is disputed94 then any undisputed element of that amount shall be paid and the disputed element shall be dealt with in accordance with the Dispute Resolution Procedure.

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93 The right to set-off here is subject to the restriction in Paragraph 2 of Part 7 (Set-off on Termination) of Schedule 17 (Compensation on Termination).

94 This would apply, for example, to Non-Acceptance Deductions.