1. Set-ofFin modern law

Much less straightforward, both in modern and in Roman law, are the rules relating to compensatio or set-off—from a purely dogmatic point of view probably the most interesting manner of terminating an obligation.

Strictly speaking, set-off even affects two obligations at the same time, though one of them in many cases only partly. If A owes 200 sesterces to B and B owes 100 to A, both parties face each other in the role of debtor as well as that of creditor. If the legal system were to look at each of these claims in isolation, an unnecessarily circuitous and uneconomical procedure would ensue: A would have to give 200 to B merely to receive part of the amount back in full satisfaction of his own claim. If neither A nor B is willing to render performance, both of them would ultimately have to sue each other: two separate court cases between the same parties would be the result. It is not difficult to realize that matters can be considerably streamlined by looking at the obligational relationships between A and B as a whole. It is only by a balance of 100 sesterces that their mutual claims against each other differ, and it is only this balance that has to be transferred between them. As a result of a set-off, only B retains part of his original claim and only he can therefore institute an action against A. The other part of his claim as well as A's counterclaim can be taken to be satisfied: for where two parties have to pay 100 to each other, the legal system can just as well allow them to maintain the status quo.

Indisputably, therefore, set-off is a convenient way of satisfying mutual debts. The magna quaestio, however, is how it becomes effective. Modern legal systems deriving from Roman law essentially fall into two groups in this regard. § 388 BGB represents a good example of the one, when it states that "[t]he set-off is made by declaration to the other party".^[3894] This rule is based on a tradition dating back to the glossator Azo.^[3895] Both French^[3896] and Austrian law,^[3897] ^{^[3898] ^[3899] on the other hand, do not require any such declaration.}

As soon (and as far) as two debts capable of being set off against each other confront each other, both of them are extinguished ipso iure;⁹² no account is taken of the will of the two parties concerned. Again, this conception of a set-off can be traced back to the glossators.⁹³ Down to the days of the pandectists both theories have vied for recognition,^[3900] and thus it is small wonder that in an essentially ius commune-based jurisdiction such as the South African one the law is still unsettled in this regard.^[3901] In some cases it has been held that set-off operates ipso iure;^[3902] in others a declaration by one of the parties has been required.^[3903] Support for both views can be found in the writings of the Roman-Dutch authorities.^[3904] ^{^[3905]} The reason for this age-old dispute essentially lies in Justinian's somewhat half-hearted attempts to consolidate the rules of classical Roman jurisprudence."

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Source: Zimmermann R.. The Law of Obligations. Roman Foundations of the Civilian Tradition. Juta & Co, Ltd,1992. — 1241 p.. 1992

1. Set-ofFin modern law

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