A set-off that involves the discharge of two debts at the request of the creditor, or the party who is owed the higher amount of debt. This party will consent to forgo the excess amount, or what is owed over that he owes. This set-off is usually implemented whether or not on the consent of the creditor who is owed the smaller amount of debt.

As in typical set-off, each party to set-off on demand should be a creditor and debtor simultaneously, and the creditor who is owed the higher debt should consent to relinquish his right in the excess amount, in terms of quality and maturity. Furthermore, both debts should be of the same kind, but not necessarily of similar quality and maturity date.

Set-off on demand and compulsory set-off both fall under the class of mandatory set-off.