What you sign has the force of law: the limits of freedom to contract

It is Chapter I of Title I of Book Five of the Civil Code of 2020, Articles 1230 to 1236. It is the entrance to contract law: what a contract is, how far freedom to agree reaches, what force what is signed has, and what fills its gaps.

Anyone entering into a contract in Puerto Rico. These rules also apply suppletorily to patrimonial conventions that are not contracts and to unilateral inter vivos juridical acts of patrimonial content.

• That the agreed clause not be contrary to law, morals or public order: the limit Article 1232 sets.Verified against the official source
• That the freedom to contract or not be exercised neither abusively nor against a legal provision.Verified against the official source
• For the preliminary contract, that the parties bind themselves to conclude a future contract; it is called an option if only one of them decides on its conclusion.Verified against the official source

• The contract itself, because what the parties provided heads the order of precedence in Article 1234 and applies first.

1. 1

   Step 1: What a contract is for the Code

   Article 1230 defines it: the contract is the bilateral juridical act by which two or more parties express their consent in the form provided by law, to create, regulate, modify or extinguish obligations. And it extends its reach: this title applies suppletorily to patrimonial conventions that are not contracts and to unilateral inter vivos juridical acts of patrimonial content, unless prohibited or incompatible.

2. 2

   Step 2: Contracting is voluntary, but not limitless

   Article 1232 opens by recognizing the freedom: it is optional to contract or not, and to do so, or not, with a particular person. And immediately bounds it: these rights may not be exercised abusively nor against a legal provision. Refusing to contract is a right; refusing abusively or against the law is not.

3. 3

   Step 3: What may be agreed

   The same article says it plainly: the parties may agree any clause that is not contrary to law, morals or public order. Those three are the only general filters; the rest come from specific statutes.

4. 4

   Step 4: The oath does not count

   A short, easily missed sentence closes Article 1232: in contracts the oath is held as not written. Swearing to perform adds nothing legally.

5. 5

   Step 5: Force of law, and before whom

   Article 1233 sums it up: what is agreed in contracts has the force of law between the parties, before their successors and before third parties in the form the law provides. Note the last clause: against third parties, to the extent the law allows, not automatically.

6. 6

   Step 6: If the contract is not in the statute book

   Article 1234 gives an order of precedence for untyped contracts: first what the parties provided; then what this title provides; and then the provisions governing the contract with an analogous exchange of performances. Failing all that, it is governed by the sources of law in Articles 3, 4 and 5 of this Code, which we did not read for this guide.

7. 7

   Step 7: The contract to sign another contract

   Article 1235 governs it: by the preliminary contract the parties bind themselves to conclude a future contract, and it is called an option if it gives only one party the power to decide on concluding the future contract. Two practical rules: the preliminary contract is not subject to the formalities the future contract must satisfy; and if the party required refuses to execute the new contract, the court may require strict performance of them.

8. 8

   Step 8: Careful: this option is not the one in Book Three

   The "option" in Article 1235 is a preliminary contract. It is not the same figure as the right of option in Articles 1029 to 1032, which is a right of preferential acquisition in Book Three and has its own guide on this site. They share a name and work differently; we say so to keep them apart.

9. 9

   Step 9: What the contract does not say

   Article 1236 completes it in order: failing contractual provision, or where a clause is ineffective, the contract is complemented with mandatory rules, suppletory rules, the usages of the place where the contract was concluded, and good faith. Good faith closes the list; it does not open it.

There is no procedure and no counter: these rules apply between the parties. The Court of First Instance comes in where the execution of the future contract in Article 1235 must be required, or where the scope of what was agreed is disputed. The Code names no agency here.

• Believing freedom to contract is absolute: it may not be exercised abusively nor against a legal provision.
• Agreeing clauses contrary to law, morals or public order and expecting them to hold.
• Adding an oath to the contract thinking it strengthens the commitment: it is held as not written.
• Assuming what is agreed automatically binds third parties: against them it holds in the form the law provides.
• Jumping to analogy in an untyped contract without first exhausting what the parties provided and what this title provides.
• Demanding of a preliminary contract the formalities of the future contract: Article 1235 says it is not subject to them.
• Confusing the option in Article 1235, a preliminary contract, with the right of option in Articles 1029 to 1032.
• Invoking good faith to fill a gap without first going through mandatory rules, suppletory rules and local usage.

These are the government pages this guide is based on.

• Poder Judicial de Puerto Rico

  Poder Judicial

  bvirtualogp.pr.gov