Paying for someone else, and paying the wrong person

They are Sections Three and Four of Chapter I of Title II of Book Four of the Civil Code of 2020, Articles 1120 to 1125. They answer the two identity questions of payment: whose hand it may come from and whose hand it must land in.

Anyone paying their own or another’s debt, and any creditor or representative receiving a payment. In obligations to give, whoever pays also needs free disposal of the thing and capacity to alienate it.

• For payment to be valid, making it to the person in whose favour the obligation was constituted or to another authorized by the creditor, the law or the court.Verified against the official source
• In obligations to give, that whoever pays has free disposal of the thing owed and capacity to alienate it.Verified against the official source
• For a third party who paid without consent to demand anything, having paid in good faith: they then claim what the payment was useful to the debtor for.Verified against the official source

• The authorization of the creditor, the law or the court, where payment is made to someone other than the person in whose favour the obligation was constituted.
• Evidence of the payment and of its usefulness to the debtor or the creditor, which is what saves several of the cases in these articles.

1. 1

   Step 1: Anyone may pay

   Article 1120 opens wide: any person may make the payment, whether or not they have an interest in performance, and whether the debtor knows and approves of it or is unaware. The creditor cannot refuse a payment merely because it comes from a third party.

2. 2

   Step 2: What they may then claim from the debtor

   The same article separates two cases. If they paid with the debtor’s consent, they may claim what they paid. If without it, they may not: only, and only if they paid in good faith, may they require the debtor to restore what the payment was useful for. The gap between what was paid and what was useful can be wide.

3. 3

   Step 3: Paying does not put you in the creditor’s place

   Article 1121 cuts it off: whoever pays in the debtor’s name, without the debtor’s knowledge, cannot compel the creditor to subrogate them in their rights. Subrogation is agreed or granted by law; it is not earned by the bare act of paying behind someone’s back.

4. 4

   Step 4: You cannot pay with what is not yours

   Article 1122 applies to obligations to give: payment made by someone lacking free disposal of the thing owed or capacity to alienate it is not valid. But it limits the clawback: if the payment consisted of a sum of money or a fungible thing, they cannot claim back from the creditor what the creditor spent or consumed in good faith.

5. 5

   Step 5: Who must be paid

   Article 1123 sets the rule: for payment to be valid, it must be made to the person in whose favour the obligation was constituted or to another authorized by the creditor, the law or the court to receive it in their name. Three sources of authorization, and none is presumed.

6. 6

   Step 6: Two cases where paying the creditor is not enough

   Article 1124 names them. Payment to the creditor is not valid if they are a person incapacitated to administer their property, except to the extent it was useful to them. Nor if it is made after the debtor has been judicially ordered to suspend payment. Paying against a court order does not release you.

7. 7

   Step 7: And one where paying the wrong person is enough

   Article 1125 protects the diligent debtor: payment made in good faith to whoever appears to be the owner of the credit releases the debtor, even if it is later learned the credit did not belong to them. And it adds two more rescues: payment to a third party is also valid in so far as it was useful to the creditor, or where the creditor ratifies it.

8. 8

   Step 8: If the debt sits in a note or a cheque

   The last paragraph of Article 1125 steps outside the Code: the validity and effects of payment of an obligation incorporated in a negotiable instrument are governed by the special legislation. We did not read that legislation for this guide, so you will not find those rules here.

These are rules between the parties and the third party who pays; where the validity of a payment is disputed, the Court of First Instance decides. The judicial order suspending payment that Article 1124 mentions also comes from the court. The Code names no agency here.

• Refusing a third party’s payment: any person may make it, with or without an interest in performance.
• Paying another’s debt without their consent and expecting everything back: you can only demand what it was useful for.
• Believing that paying subrogates you: whoever pays without the debtor’s knowledge cannot compel the creditor to subrogate them.
• Handing over in payment a thing you have neither free disposal of nor capacity to alienate.
• Paying an employee or relative of the creditor without authorization from the creditor, the law or the court.
• Paying after a judicial order suspending payment: that payment is not valid.
• Paying a person incapacitated to administer their property and assuming it counts: it is valid only to the extent it was useful to them.
• Looking in the Code for the effects of payment by negotiable instrument: it sends them to the special legislation.

These are the government pages this guide is based on.

• Poder Judicial de Puerto Rico

  Poder Judicial

  bvirtualogp.pr.gov