A Practice Note discussing setoff (also known as set-off or offset) in or relating to commercial agreements between two parties, where one party retains amounts that it owes to the other party and applies the retained amounts against amounts owed to it by that other party. This Note addresses setoff rights granted by state common law, statute, and equity. This Note also briefly covers enforceability under federal bankruptcy law and state law (for example, state garnishment statutes, banking laws, and the Uniform Commercial Code (UCC)).