In short
The ineffectiveness section closes the agency chapter with seven articles. Article 1432 lists the grounds for extinction in addition to the general grounds for resolution of contracts: death or incapacity of the agent; expiry of the term; serious or repeated non-performance that reasonably casts doubt on the defaulter’s ability or intention to meet the remaining obligations exactly; dissolution of either party provided it does not derive from merger or spin-off; dissolution, by merger or spin-off, where the agent’s business volume decreases significantly; and a significant decrease in the agent’s business volume. Article 1433 says no prior notice is required in those cases, except in the last two. Article 1434 recognises compensation for the agent precisely in those two. Article 1435 carries the rule that moves the most money: the agent whose work has significantly increased the principal’s operations and continues to produce, after the extinction, substantial advantages for that principal, is entitled to a remuneration, and that holds whether the contract was of determined or indeterminate duration; it is not due where the resolution occurred through the agent’s fault or unilateral act without causes reasonably excusing the discontinuation; and, absent agreement, it is fixed judicially without exceeding the equivalent of one year of the net remunerations resulting from averaging those received over the last five years, or the years the contract lasted if fewer. Article 1436 clarifies that this remuneration is additional to any compensation for resolution or culpable conduct of the principal. Article 1437 warns that none of this impairs the agent’s rights under the applicable special laws, without naming any. And Article 1438 allows non-competition clauses up to a maximum of one year, with three conditions.
What is it?
They are Articles 1432 to 1438 of the Civil Code of 2020: why an agency contract ends, when prior notice is needed, what is owed on ending and how long a non-competition clause may last.
Who can do it?
Commercial agents and principals whose agency contract, governed by the Puerto Rico Civil Code, is ending or has ended.
Requirements
- For the Article 1435 remuneration: that the agent’s work significantly increased the principal’s operations and keeps producing substantial advantages after the extinction.Verified against the official source
- That remuneration is not due where the resolution occurred through the agent’s fault or unilateral act without causes reasonably excusing the discontinuation of its activities or operations.Verified against the official source
- Statutory cap: it may not exceed the equivalent of one year of the net remunerations averaged over the last five years, or over the years the contract lasted if fewer.Verified against the official source
- For a non-competition clause: the agent’s exclusivity in the principal’s business area, a determined territory or groups, reasonable application under the totality of the circumstances, and a maximum of one year.Verified against the official source
Documents you need
Cost
Step by step
Step 1: The grounds, on top of the general ones
Article 1432: the contract is extinguished by the general grounds for resolution of contracts, and in addition by the death or incapacity of the agent, expiry of the term, serious or repeated non-performance, dissolution of either party not deriving from merger or spin-off, dissolution by merger or spin-off where the agent’s business volume decreases significantly, and a significant decrease in the agent’s business volume.
Step 2: A list of six with two conjunctions
The consolidated text closes both subsection (d) and subsection (e) with "; y", so the six-item list carries the conjunction twice. It is reproduced here exactly as printed, uncorrected.
Step 3: When prior notice is needed
Article 1433: where the resolution occurs by one of those grounds, no prior notice is required, except in the cases of subsections (e) and (f) — the two that turn on a significant decrease in the agent’s business volume.
Step 4: And when there is compensation
Article 1434: where the resolution occurs in those same cases (e) and (f), the agent is entitled to compensation per the rules on remuneration. The two situations that require prior notice are also the two that open compensation.
Step 5: The remuneration for the clientele you left
Article 1435: the agent whose work has significantly increased the principal’s operations and continues to produce, after the extinction, substantial advantages for that principal, is entitled to a remuneration. Two facts, not one: that the operations rose, and that they keep giving advantages after the contract ended.
Step 6: It does not matter whether the contract had a term
The article says so itself: the foregoing applies regardless of whether the contract is of determined or indeterminate duration. That the contract ended by expiry of its term does not close this door.
Step 7: When it is not owed
Second paragraph: it is not due where the resolution occurred through the agent’s fault or unilateral act without causes reasonably excusing the discontinuation of its activities or operations. The agent’s unilateral act is excused if reasonable causes intervene; the article puts it that way.
Step 8: The cap: one year of the average
Third paragraph: absent agreement, the remuneration is fixed judicially, though it may not exceed the equivalent of one year of the net remunerations resulting from averaging the value of those received by the agent over the last five years or, where it does not reach five years, the years the contract lasted. Note that the Code sets a ceiling but no floor.
Step 9: And it is additional, not a substitute
Article 1436: the remuneration recognised in the previous article is additional to any compensation the agent is entitled to for resolution or culpable conduct of the principal. One does not discount the other.
Step 10: The special laws, unnamed
Article 1437: the foregoing provisions on the agent’s remuneration do not impair the agent’s rights under the applicable special laws. The Code names none of those laws, and this guide neither names nor guesses them.
Step 11: Non-competition: one year at most
Article 1438: the parties may agree non-competition clauses up to a maximum of one year where the agent’s exclusivity in the principal’s business area is provided for; where they apply in a determined territory or to determined groups of persons; and where their application is reasonable under the totality of the circumstances. The three conditions go together, and the year is a ceiling.
Step 12: What this section does not carry
It does not fix the length of the prior notice owed in the (e) and (f) cases — that rule, one month per year up to six months, is in the chapter’s general section and has its own guide — does not define what a significant decrease is, sets no floor for the Article 1435 remuneration, and describes no court procedure or fee. None of that is here.
Where to do it
Article 1435 says that, absent agreement, the remuneration is fixed judicially: the forum is the Court of First Instance. The Code names no administrative agency for this chapter. Article 1437 refers to the applicable special laws without naming them.
How long it takes
What to do if something goes wrong
If your contract is of indeterminate duration and what you are after is the prior notice, that rule is in the chapter’s general section — one month for each year in force, up to a maximum of six months — and has its own guide. If what you are claiming are commissions on deals already closed, see the guide on the agent’s remuneration. If your contract is not agency but concession or distribution, that is a different chapter with its own ineffectiveness section. Article 1437 warns that special laws may give you more rights, but does not name them, and this guide does not guess which. MiPRFácil does not represent anyone in court and gives no legal advice.
Common mistakes
- Believing everything is lost when the term expires: Article 1435 applies equally to contracts of determined duration.
- Giving up the clientele remuneration without checking whether the principal’s operations keep producing advantages.
- Reading the one-year cap as the amount to be paid: it is a ceiling, not a floor.
- Averaging wrongly: the basis is the net remunerations of the last five years, or of the years the contract lasted if fewer.
- Assuming the Article 1434 compensation replaces the 1435 remuneration: 1436 says they are additional.
- Expecting prior notice on every ground for extinction: it is owed only in subsections (e) and (f).
- Signing a non-competition clause longer than one year.
- Signing one not limited to a territory or to determined groups of persons.
- Accepting a non-competition clause without the agent’s exclusivity in the principal’s business area.
- Dismissing the special laws Article 1437 leaves untouched without naming.
Frequently asked questions
What is the most that can be recognised when the agency ends?
Article 1435 sets a ceiling: the equivalent of one year of the net remunerations resulting from averaging those received over the last five years, or the years the contract lasted if fewer.
I resigned. Do I lose the clientele remuneration?
Article 1435 declares it not due where the resolution occurred through the agent’s fault or unilateral act without causes reasonably excusing the discontinuation of its activities or operations. Where such causes intervene, the article does not exclude it.
Must they give me notice before ending the contract?
Article 1433 says no prior notice is required where the resolution occurs by the grounds of Article 1432, except in the cases of subsections (e) and (f).
How long may a non-competition clause last?
Up to a maximum of one year, and only where the three conditions of Article 1438 are met: the agent’s exclusivity in the principal’s business area, application in a determined territory or to determined groups, and reasonableness under the totality of the circumstances.
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 9, 2026
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