In short
Article 1497 of the Civil Code of 2020 defines the transaction in a single sentence with two pieces: by the contract of transaction, through reciprocal concessions, the parties put an end to a litigation or to its uncertainty over a legal relationship. The first piece is the reciprocal concessions: both sides give something; if only one gives, the Code is describing something else. The second is what is being ended, and there the article opens wider than people assume: a litigation, or the uncertainty over a legal relationship. No lawsuit need have been filed to settle. Article 1498 forestalls a frequent confusion: where the reciprocal concessions include the granting of other contracts, those are subject to the provisions of this title. If the agreement contains a sale, a lease or a loan, those contracts do not float free. Article 1499 has a single sentence and carries a lot: the contract of transaction is interpreted restrictively. What was not conceded in the text was not conceded, and that cuts both ways. And Article 1500 explains why signing a settlement is a serious decision: the transaction produces the effects of res judicata. The Code does not define res judicata here or describe how it is raised, and this guide does not supply that. What is worth keeping is the practical consequence the article itself states: what was settled is closed with the same force a final decision would close it.
What is it?
They are Articles 1497 to 1500 of the Civil Code of 2020: what a transaction is, what happens to contracts granted inside it, how it is interpreted and what effects it produces.
Who can do it?
People who want to end a litigation or the uncertainty over a legal relationship through reciprocal concessions, under the Puerto Rico Civil Code.
Requirements
- That there be reciprocal concessions: both parties give something.Verified against the official source
- That they put an end to a litigation or to the uncertainty over a legal relationship.Verified against the official source
- If the concessions include the granting of other contracts, those are subject to the provisions of this title.Verified against the official source
- The transaction produces the effects of res judicata.Verified against the official source
Documents you need
Cost
Step by step
Step 1: Both sides must concede
Article 1497: through reciprocal concessions. Reciprocity is in the definition itself. The Code does not say how much each must give, but it does say both give.
Step 2: No filed lawsuit is required
The same article: they put an end to a litigation or to its uncertainty over a legal relationship. The second half of that disjunction allows settling before anyone sues, over a legal relationship whose fate is unclear.
Step 3: If the agreement contains other contracts
Article 1498: where the reciprocal concessions include the granting of other contracts, those are subject to the provisions of this title. A sale or a lease agreed as part of the settlement does not fall outside those rules.
Step 4: It is interpreted restrictively
Article 1499, a single sentence: the contract of transaction is interpreted restrictively. That is why writing precisely what is and is not settled matters: what is not in the text is not read into it.
Step 5: And it cuts both ways
That rule favours no one in particular: the claimant cannot stretch the agreement to cover more than what is written, and the released party cannot read into it a waiver that is not there.
Step 6: What is settled stays closed
Article 1500: the transaction produces the effects of res judicata. That is why signing a settlement is not a formality: it closes the matter with the force the Code itself gives it.
Step 7: What res judicata is: not defined here
The article names it and does not describe it: it does not say how it is raised, before whom, or with what reach. This guide does not complete that content and limits itself to reproducing the effect the Code states.
Step 8: What this guide does not cover of the chapter
Arithmetic errors, unlawful object, the form the Code requires and the five grounds of invalidity are in Articles 1501 to 1504, and have their own guide on this site. Before signing, those are worth reading too.
Where to do it
The transaction is agreed between the parties, and the Code admits that it be recorded in a resolution or judgement issued by the court. Disputes over its reach or validity are decided by the Court of First Instance. The Code names no agency for this chapter.
How long it takes
What to do if something goes wrong
If you are after the form the agreement must take or when it is invalid, that is in Articles 1501 to 1504, with its own guide. If the agreement includes future support or non-waivable rights, the Code expressly forbids it and that rule is in the same guide. If another contract was granted inside the transaction, that contract is subject to this title. These four articles do not define res judicata, do not say how much each side must concede, and fix no form or fee. MiPRFácil does not represent anyone in court and gives no legal advice.
Common mistakes
- Calling a transaction an agreement where only one side concedes: reciprocity is in the definition.
- Believing a filed lawsuit is required: the uncertainty over a legal relationship may also be settled.
- Drafting in vague terms and expecting a broad reading: Article 1499 orders restrictive interpretation.
- Treating as settled what was not written into the agreement.
- Signing without weighing that the transaction produces the effects of res judicata.
- Assuming a contract granted inside the transaction falls outside this title’s rules.
- Signing without first reading the grounds of invalidity and the form the Code requires.
Frequently asked questions
Can I sue again over what we already settled?
Article 1500 says the transaction produces the effects of res judicata. The Code does not define that concept here or describe how it is raised.
Does there need to be a lawsuit to settle?
Not necessarily. Article 1497 admits putting an end to a litigation or to the uncertainty over a legal relationship.
The agreement does not mention a matter. Is it understood to be included?
Article 1499 orders the contract of transaction interpreted restrictively, so what is not recorded is not presumed conceded.
Inside the agreement we sold a property. What rules govern it?
Article 1498 says that where the reciprocal concessions include the granting of other contracts, those are subject to the provisions of this title.
Official sources
These are the government pages this guide is based on.
- Poder Judicial de Puerto Rico
Poder Judicial
bvirtualogp.pr.gov
Last verified
September 10, 2026
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