Performance or set-off by a joint and several obligor or set-off by the obligee against one joint and several obligor discharges the other obligors in relation to the obligee to the extent of the performance or set-off.
1. Performance by a joint and several obligor
If one of the co-obligors has already fully or partially performed the obligation, the other obligors may successfully assert this as a defence
should the obligee still attempt to claim performance from the other co-obligors.
1. Companies A, B and C are jointly bound to reimburse a loan of EUR 100,000. Upon lender X’s request, A fully reimburses the loan. B and C can avail themselves of A’s performance if X still claims reimbursement of the loan from them.
2. The facts are the same as in Illustration 1, but A only reimburses EUR 30,000. B and C are still jointly and severally bound for EUR 70,000 (see Article 11.1.3), but they may invoke A’s partial payment if X still claims the full amount from them.
The rule laid down in this Article with respect to performance by one of the co-obligors also applies, with appropriate adaptations, in the case of set-off between the obligee and one of the obligors. Rights of set-off have already been mentioned in Article 11.1.4, where the issue is to determine which of the co-obligors could assert rights of set-off. Article 11.1.5 deals with the subsequent issue of the effects of set-off, once it has been exercised. On the rules governing set-off itself, see Articles 8.1 to 8.5.
3. The facts are the same as in the preceding illustrations: A, B and C are jointly bound to reimburse a loan of EUR 100,000 to X. However, on the basis of a different transaction A has become X’s obligee for an amount of EUR 60,000. If A exercises its right of set-off against X by serving appropriate notice (as provided in Article 8.3), it will have the same effect as partial performance by A of its joint and several obligation, thus discharging B and C for the corresponding amount.
The same rule applies if the right of set-off has been exercised by the obligee against one of the joint and several obligors.
4. The facts are the same as in Illustration 3, but it is X who takes the initiative to give the set-off notice to A. The effects are identical. A is discharged for the amount of set-off (EUR 60,000), and the other co-obligors B and C are also discharged for the same amount.