Latin diffalcare, to abate, deduct, take away 1 Reduction of a claim by allowance of a counter-claim 2 Misappropriation of trust funds - by a public or corporate officer
1 Defaulting on a debt or other obligation such to account for public or trust funds Usually used in the context of public officials 2 Defalcation has another legal meaning referring to the setting-off of two debts owed between two people by the agreement to a new amount representing the balance I owe you $7 and you owe me $3; we agree to "defalk"; the result is that I owe you $4 This is a type of novation