Set-off is a method of termination of obligations which is one of the most commonly used institutes in everyday commercial transactions. According to the Croatian Obligation Act, a person may set off a claim against the claim of another person if cross-claims are mutual, equal, due and enforceable. Set-off shall not be effected when requirements for it have been met, but rather when a statement of set-off is made. After the unilateral statement of set-off has been made, it shall be deemed that the set-off has been effected at the moment when all requirements for it are met. Therefore, Croatia follows the German model of unilateral set-off. This thesis deals with the institute of set-off as a means of terminating obligations, which is regulated by the Croatian Obligations Act The comparative and analytical method were mostly used for this thesis, while the historical-legal and etymological method are used to a lesser extent. The legal effects of set-off extend to third parties as well, and they lead to the termination of both the main and ancillary obligations. Therefore, the aim of this thesis is to systematically analyse all aspects of the domestic regulation of the institute of set-off and to provide suggestions de lege ferenda. In that line, this thesis includes concrete de lege ferenda suggestions of solutions to identified issues in domestic legal practice. The resulting conclusions contribute to a better understanding of set-off in Croatian legal and business practice. The doctoral thesis starts with elaborations on the term, economic role, functions and historical and legal development of set-off. The main purpose of the first part is to provide a broader understanding of set-off through the elaboration of its legal nature, the importance of its practical and commercial role in society, and differences in comparison to other similar legal institutes. Afterwards, attention is given to the different types of set-off and their specific issues. The central part of this thesis is dedicated to the requirements for set-off: mutuality, equivalence, maturity and enforceability of claims. "Mutual obligation" means that the debtor of the claim subject to set-off must be the creditor of the claims against which it shall be set-off. "Equivalence" means that the claims are of the same kind. A further condition for set-off is that the claims must be "due" and "enforceable", which means that party must have the right to demand the performance of its claim and must have the right to perform its own obligation. In this part, the author also analyses the situations where set-off is excluded by law (such as a claim arising from willful damage, a claim for set-off of damage caused by injury to health or by causing death or a claim which arises from the legal obligation of support). Set-off also could be excluded by contract. The following section discusses the statement of set-off. The last part of the thesis highlights set-off in the context of bankruptcy proceedings, where lex specialis set-off rules are applied. The conclusion reached on the basis of the conducted research is that the domestic obligation legislature on set-off is comparable to the contemporary Germanic legal systems, and that the specific identified issues can be removed through minor amendments de lege ferenda to the Croatian Obligation Act. Thus, there is no need for significant amendments to the set-off provisions, in order to harmonise the domestic law with the contemporary legal dealings.