Set-Off (legal concept)

Set-off is a legal right that allows a debtor to reduce the amount they owe to a creditor by asserting a debt they hold against the same creditor. Essentially, if two parties owe each other money, each can subtract their owed amount from the other’s before making a final payment, potentially settling both debts simultaneously. This mechanism helps prevent double payment and simplifies debt resolution, especially in commercial transactions. Set-off is typically used when the debts are due and settled between the same parties, and it can be barred by contractual terms or legal restrictions in certain situations.