Contracts of chance: the risk is assumed, the rest can still be rescinded

They are Articles 1505 to 1509 of the Civil Code of 2020: what an aleatory contract is, which ones the Code lists, what general rules apply to them, and the definition of the insurance contract with its referral to special legislation.

Parties to a contract whose economic advantages or disadvantages depend on an uncertain event, under the Puerto Rico Civil Code.

• That the economic advantages or disadvantages depend on an event uncertain for both parties or for only one of them.Verified against the official source
• The Article 1506 list includes insurance, the game, the wager, division and decision by lot, the life annuity and the sale of a litigious right, and stays open by its subsection (h).Verified against the official source
• Except as to the assumption of risk, the general rules of efficacy and inefficacy of contracts apply to them, rescission included.Verified against the official source
• Everything related to the insurance contract is governed by the provisions of the special legislation, which the Code does not name.Verified against the official source

• The contract itself: from it one reads what the uncertain event on which the advantages or disadvantages depend is.

1. 1

   Step 1: What makes a contract aleatory

   Article 1505: that its economic advantages or disadvantages depend on an uncertain event. The uncertainty is about the economic outcome, not about the contract’s existence.

2. 2

   Step 2: The uncertainty may sit on one side only

   The same article says it: uncertain for both parties or for only one of them. Both need not be in the dark for the contract to be aleatory.

3. 3

   Step 3: The seven the Code names

   Article 1506: insurance, the game, the wager, division by lot, decision by lot, the life annuity and the sale of a litigious right.

4. 4

   Step 4: And the list stays open

   Subsection (h): and any other contracts agreed under freedom of will. The preceding seven are examples, not a closed set.

5. 5

   Step 5: Assuming a risk does not shield the contract

   Article 1507: aleatory contracts, except as regards the assumption of the risk that gives rise to their possible advantages or disadvantages, are subject to the rules of efficacy and inefficacy of contracts in general, including those relating to rescission.

6. 6

   Step 6: What is beyond review is the chance element

   The article’s exception reaches the assumption of risk, not the whole contract. Having bet on an outcome does not bar reviewing the rest on the general grounds. The Code does not spell out what exactly falls inside that assumption of risk, and this guide does not settle it on its behalf.

7. 7

   Step 7: Insurance, as the Code defines it

   Article 1508: the one by which a person binds itself to indemnify another, to pay them or to provide them a specific or determinable benefit, upon the occurrence of an uncertain event provided for in it. Three verbs — indemnify, pay, provide — and an event provided for in the contract itself.

8. 8

   Step 8: And reinsurance is inside the word

   The same article closes it: the term insurance includes reinsurance. It is a definition of the Code, not a minor drafting detail.

9. 9

   Step 9: But insurance is governed by another statute

   Article 1509: everything related to the insurance contract is governed by the provisions of the special legislation. The Code defines it and immediately sends the subject outside itself.

10. 10

    Step 10: And it does not say which statute that is

    The article names none. We did not read it for this guide, so no insurance statute is named here and none of its rules is described: if your matter is a policy, a claim or a cancellation, that is governed by that special legislation and not by these articles.

11. 11

    Step 11: What this guide does not cover of the chapter

    The section on the game and the wager, with the rule that there is no action to collect and the others accompanying it, is not in this guide.

These articles describe no procedure before any agency. Disputes over an aleatory contract are decided by the Court of First Instance. Everything related to the insurance contract is referred by the Code itself to the special legislation, which it does not name.

• Believing an aleatory contract cannot be rescinded: Article 1507 applies the general rules to them, rescission included.
• Reading the Article 1507 exception as covering the whole contract: it reaches the assumption of risk.
• Assuming the uncertainty must be on both sides: the article admits it on one side only.
• Taking the Article 1506 list as closed: subsection (h) leaves it open.
• Looking in the Civil Code for insurance policy rules: Article 1509 sends them to the special legislation.
• Forgetting that, for the Code, the term insurance includes reinsurance.
• Expecting these articles to regulate the life annuity or the sale of a litigious right: they only name them.

These are the government pages this guide is based on.

• Poder Judicial de Puerto Rico

  Poder Judicial

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