This article considers independent and equitable set-off in English law with their functional equivalents in Scots law. The analysis demonstrates that set-off is not a concept divided by a common language. Indeed, there is no doctrine of set-off in Scots law. The functional equivalent of independent set-off is the doctrine of compensation in Scots law. While compensation has many similarities to independent set-off, there are some important differences, principally that compensation has retrospective effect. This has important legal and practical consequences. The functional equivalent of equitable set-off is found in one facet of the doctrine of mutuality of contract in Scots law. This is an aspect of the doctrine that has, to date, been largely ignored but is explored in this article. It is argued that using the term “set-off” in both jurisdictions masks important differences between Scots and English law in this area and should therefore be avoided.

Set-off is of significant practical importance, both nationally and internationally.1 This is unsurprising, given its practical utility. Set-off allows party B to extinguish, in whole or in part, party A’s claim against B, using B’s claim against A. This means that B need not pay the sum owed to A and, separately, seek payment of the sum owed to him by A. B can simply use the sum he owes A to extinguish his claim against A, with the party owing the higher amount paying over the balance. As such, B need not be out of pocket in the period between paying A and receiving payment from A. Yet, despite