Which statement distinguishes compulsory counterclaims from permissive counterclaims?

• A. Compulsory counterclaims arise from different transactions and must be pleaded.
• B. Compulsory counterclaims arise out of the same transaction or occurrence and must be pleaded; permissive counterclaims arise from the same transaction.
• C. Compulsory counterclaims arise out of the same transaction or occurrence and must be pleaded; permissive counterclaims do not arise from the same transaction and are optional.
• D. Both must be pleaded in every case.

Answer: (C)

The essential idea is how claims relate to what sparked the lawsuit. A counterclaim that arises from the same transaction or occurrence as the plaintiff’s claim must be pleaded in the defendant’s answer; it’s compulsory, and failing to raise it typically bars bringing it later in another action. In contrast, a permissive counterclaim is optional and does not have to be tied to the same transaction or occurrence. It may be asserted in the current suit or pursued later in a separate action.

So the best statement is that compulsory counterclaims arise from the same transaction or occurrence and must be pleaded, while permissive counterclaims do not arise from the same transaction and are optional.