Explanation of Article 258
This article addresses the statement of "judicial set-off," which is the set-off that is effected by a court ruling. The article stipulates that the court may adjudicate judicial set-off in cases where the conditions for legal or contractual set-off are not met. For example, if the two debts are not of the same type, not due for performance, or not free from dispute, in such cases, the court may adjudicate judicial set-off between them.
It should be noted that judicial set-off leads to the "extinguishment of the obligation," so no legal effect is imposed on the two debts after the set-off.
This article is considered one of the most important articles related to judicial set-off, as it explains how the obligation is extinguished and enumerates its methods.
Related To
Article 258
If an obligee does not discharge an assignor from liability, all the agreed-upon securities shall be retained. However, if the obligee discharges the assignor from liability, the securities provided by others shall not be retained, and solidary debtors shall remain liable after deducting the assignor’s share from the debt.