When should the guarantor be permitted to rely on the principal's set-off?

摘要

This article explores the circumstances in which a guarantor in defending an action to enforce the guarantee may rely on a set-off possessed by the principal debtor as against the creditor. Current case law gives no clear guidance. The author argues that the guarantor should be permitted to rely on the principal's claim when it amounts to an abatement or equitable set-off since in such a case the claim will be " closely connected' to the guaranteed debt, but not in the case of a legal set-off not related to the guaraneteed transaction.