Agent’s commission: earned when the contract is perfected

They are Articles 1428 to 1431 of the Civil Code of 2020: what the agent’s remuneration consists of, which contracts earn a commission, when it is earned and when it may be conditioned.

Commercial agents and principals under an agency contract governed by the Puerto Rico Civil Code.

• The remuneration may consist of a fixed amount, a commission or a combination of both.Verified against the official source
• If the contract does not provide the mechanism to compute it, the usages of the place of the agent’s operation apply and, failing those, by arbitration or mediation.Verified against the official source
• The right to the commission is earned at the moment the contract with the third party is perfected.Verified against the official source
• Conditioning the remuneration on the third-party contract being executed requires that condition to appear expressly in the agency contract.Verified against the official source

• The agency contract with the mechanism for computing the remuneration: without it, Article 1428 refers to the usages of the place and, failing those, to arbitration or mediation.
• The record of the date the principal received the order: the fifteen days of Article 1430 run from there.
• The express clause, if the remuneration is subordinated to the execution of the third-party contract.

1. 1

   Step 1: Fixed, commission, or both

   Article 1428, first paragraph: the agent’s remuneration may consist of a fixed amount, a commission or a combination of both. The Code opens all three and imposes none.

2. 2

   Step 2: If the contract does not say how it is computed

   Second paragraph: where the contract does not provide the mechanism to compute the remuneration, the usages of the place of the agent’s operation apply and, failing those, by arbitration or mediation. Two steps: first the custom of the place where the agent operates, and only failing that, arbitration or mediation. The Code names no forum, institution or procedure for those, and neither does this guide.

3. 3

   Step 3: First group: what you closed

   Article 1429(a): contracts concluded with the agent’s intervention. The obvious case, and the one nobody disputes.

4. 4

   Step 4: Second group: the client that was already yours

   Subsection (b): those agreed with a client the agent previously represented for an analogous business, if there is no other agent entitled to remuneration. Two conditions inside one: that the business be analogous, and that no other agent be entitled. The Code does not define what makes a business analogous, and neither does this guide.

5. 5

   Step 5: Third group: your zone, even if you did not sell

   Subsection (c): those agreed in the geographic zone or with determined groups or persons belonging to them, even if the agent did not promote them, where the agent has exclusivity in that zone or over those groups. Exclusivity is the key: without it, this subsection does not apply.

6. 6

   Step 6: The exact moment it is earned

   Article 1430, first paragraph: the right to the commission is earned at the moment the contract with the third party is perfected. Not when the third party pays, nor when delivery happens: when the contract is perfected.

7. 7

   Step 7: Fifteen days of silence count as acceptance

   Second paragraph: where the agent only promoted the contract, the order transmitted to the principal is presumed accepted for the purpose of earning the commission, except where rejection or reserve intervenes within fifteen days from receipt of the order. Note the word "reserve": a full rejection is not needed to break the presumption.

8. 8

   Step 8: Two fifteen-day periods the Code does not fit together

   Article 1426(e) requires the principal to communicate acceptance or rejection within the usual period, which must never be less than fifteen days from receipt: there the fifteen days are a floor on the answering period. Article 1430 makes silence past fifteen days from receipt of the order count as acceptance: there the fifteen days are a deadline. The Code puts the same number in both places and does not say how they relate. This guide prints both as written and reconciles nothing.

9. 9

   Step 9: Conditioning the commission: in writing and with proof

   Article 1431: where the remuneration, in whole or in part, is subordinated to the execution of the contract agreed with the third party, such condition must appear expressly in the agency contract. And the second half is what matters: that condition is only effective where the principal proves the non-execution is due to a cause not imputable to it. The burden of proof is placed on the principal.

10. 10

    Step 10: What these articles do not carry

    There is no percentage, no minimum amount, no statement of what the usages of the place are in any given trade, no arbitration or mediation forum or institution named, and no definition of analogous business. None of that is here, and this guide does not fill it in.

The contract runs between agent and principal; the Code names no agency for this chapter. Article 1428 itself refers to arbitration or mediation where there is no computation mechanism and no usages of the place, without naming an institution. Claims for unpaid commissions are decided by the Court of First Instance. The chapter further warns that these rules do not impair the agent’s rights under the applicable special laws, without naming them.

• Believing the commission is earned when the third party pays: Article 1430 earns it when the contract is perfected.
• Giving up the commission on sales in your zone when you have exclusivity over it.
• Forgetting that subsection (c) applies only where there is exclusivity in the zone or over the groups.
• Leaving the computation mechanism out of the contract and being left to the usages of the place.
• Not documenting the date the principal received the order.
• Assuming a formal rejection is needed: a reserve within fifteen days also breaks the presumption.
• Accepting a payment condition tied to execution without it appearing expressly in the contract.
• Forgetting that such a condition is only effective if the principal proves the non-execution is not imputable to it.
• Looking in these articles for a commission percentage: they carry none.

These are the government pages this guide is based on.

• Poder Judicial de Puerto Rico

  Poder Judicial

  bvirtualogp.pr.gov