Subrogation

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The guarantor’s right, having performed its guarantee obligation to a beneficiary with respect to a guaranteed debtor, to step into the beneficiary’s shoes and sue the arse off that debtor, seeing as the beneficiary will be disinclined to do so having, thanks to the guarantee, suffered no loss.

A debtor cannot set off a subrogated claim against liabilities the guarantor has to that debtor. Would the converse situation apply? Could a debtor set off a subrogated claim by the guarantor against another liability owed to the debtor by the beneficiary of the guarantee? On one hand the set-off should have been applied before the guarantee has been called upon. On the other hand, what if the guarantee is expressed to be payable regardless of any set-off (as usually it would be).

See also

• Guarantee
• Set off