This master’s thesis examines set-off as one of the most important and effective mechanism's for the extinction of obligations in contract law. Within the Slovenian legal system, both the substantive and procedural aspects of set-off are analysed in detail, with particular attention given to its role in enforcement and insolvency proceedings, where specific legal rules apply. The thesis outlines the conditions for valid set-off and its legal effects. A separate chapter presents a comparative legal analysis based on the three leading instruments of legal unification (model laws): PECL, PICC, and DCFR. The primary aim of the thesis is to provide a comprehensive overview of the institute of set-off and a critical evaluation of its functioning from the perspectives of legal theory, case law, and comparative law. It is established that set-off significantly contributes to legal certainty and enhances the efficiency of legal transactions, especially in cross-border commercial relations. At the same time, the thesis raises the question of whether the current Slovenian ex tunc effect of set-off is appropriate and considers the potential benefits of adopting an ex nunc model, as recognised in certain international instruments.
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