A more thorough explanation:

Mutual debts refer to cross-debts of the same kind and quality between two persons. This means that two people owe each other money for the same type of debt. For example, if John owes Jane $100 for a loan, but Jane also owes John $50 for a separate loan, they have mutual debts.

This concept is important in legal cases where both parties owe each other money. Instead of paying each other separately, they can offset their debts and only pay the difference. For instance, if John owes Jane $100 and Jane owes John $50, John can pay Jane $50 and they will be even.

Another example of mutual debts is when two companies owe each other money for goods or services provided. If Company A owes Company B $500 for a shipment of products, but Company B also owes Company A $300 for a previous order, they have mutual debts.

Mutual debts can simplify the payment process and reduce the amount of money that needs to be exchanged between parties.