Agency contract: one month’s notice per year, up to six

They are Articles 1421 to 1425 of the Civil Code of 2020, opening the agency chapter: what the contract is, the agent’s position as to risk, sub-agents, duration, and the notice to rescind.

Principals and agents under an agency contract governed by the Puerto Rico Civil Code, and sub-agents, whose relations with the agent are governed by this same chapter.

• That the agent bind itself to continuously promote the principal’s business in exchange for remuneration.Verified against the official source
• If the agent assumes the risk of the operations: that the contract be in writing and include a complementary remuneration proportional to the risk and to the diligence required.Verified against the official source
• To rescind a contract of indeterminate duration: to give notice of one month for each year in force, up to a maximum of six months.Verified against the official source

• If the agent assumes the risk of the operations, the written contract: Article 1422 expressly requires it in that case.
• The record of how long the contract has been in force: the number of months of notice comes from it.
• The rescission notice, with its date, because its omission obliges payment of the lost profits.

1. 1

   Step 1: What an agency is

   Article 1421: the agent binds itself, in exchange for the remuneration the principal pays, to continuously promote the principal’s business. What distinguishes it from a one-off errand is that continuity.

2. 2

   Step 2: The agent neither represents nor bears the risk

   Article 1422, first sentence: the agent is an independent intermediary who neither assumes the risk of the operations nor represents the principal. That is the default position.

3. 3

   Step 3: And if it does bear the risk, two requirements

   The second sentence: where it assumes that risk, the contract must be in writing and include a complementary remuneration, proportional to the risk assumed and to the diligence required of the agent. In writing and with additional pay: both.

4. 4

   Step 4: Sub-agents run under this same chapter

   Article 1423, one line: the relations between agent and sub-agent are governed by the provisions of this chapter. What applies above applies below.

5. 5

   Step 5: When the contract is of indeterminate duration

   Article 1424: it may be agreed for a determined time; but where nothing is said, or where the relationship continues after expiry, it is considered of indeterminate duration. Carrying on past the date turns the contract into an open-ended one.

6. 6

   Step 6: The notice: one month per year, up to six

   Article 1425: where the contract is of indeterminate duration, either party may rescind it by a notice that must be of one (1) month for each year in force, up to a maximum of six (6) months. Count the years in force, not the years remaining.

7. 7

   Step 7: Longer terms may be agreed

   The same article allows it: the parties may agree longer terms. What it does not say is anything about agreeing shorter ones, and this guide does not fill that silence.

8. 8

   Step 8: And not giving notice has a price

   Last paragraph: the omission of the prior notice obliges payment to the affected party of the profits lost during the notice period. That is, the notice is replaced by money, and the money is measured by the term that should have been given.

9. 9

   Step 9: The rule works for both sides

   The article speaks of "either party". The notice and its price protect the agent against the principal as much as the principal against the agent.

10. 10

    Step 10: What the article does not clarify about the count

    It does not say how a fraction of a year counts nor in what form the notice must be given. This guide fills neither gap; it does recommend the notice be in writing and dated.

The contract and the notice run between the parties; the Code names no agency. If the agent’s activity is regulated by a special statute — insurance, real estate or another — that statute governs its own ground and we did not read it here. Claims for the lost profits are decided by the Court of First Instance.

• Ending an open-ended agency contract overnight: one month’s notice per year in force is required.
• Counting the notice by the years remaining instead of the years in force.
• Giving more than six months believing the statute requires it: six is the article’s maximum, though the parties may agree longer terms.
• Omitting the notice and believing it costs nothing: the profits lost during that term must be paid.
• Believing the rule protects only the agent: the article speaks of either party.
• Carrying on after expiry and assuming the contract is still fixed-term: it becomes of indeterminate duration.
• Having the agent assume the risk of the operations without putting it in writing.
• Having them assume that risk without the proportional complementary remuneration the article requires.
• Assuming the agent represents the principal: Article 1422 says the opposite.

These are the government pages this guide is based on.

• Poder Judicial de Puerto Rico

  Poder Judicial

  bvirtualogp.pr.gov