Libro Quinto Título XX. La transacción

A compromise is a contract by which the parties, through reciprocal concessions, decide by mutual agreement any doubtful or disputed point, avoid the lawsuit that could be brought or terminate the one that has been commenced.

For the settlement to be valid, the following are required:

1°.That the parties have capacity to dispose of what is the subject matter of the settlement;

2°.That the things or matters with respect to which settlement is made be doubtful or litigious;

3°.That the parties promise, assign, or give something to one another reciprocally; and

4°.That, when it is entered into through a mandatary, he have special authority, not only to settle, but for the acts and contracts derived from the settlement that require special authority.

The settlement may refer to all or only to any one or some of the disputed points; but, in any case, the settlement includes only what has been expressed by the parties, whether their intention was manifested in general or special terms, or such intention is known as a necessary consequence of what was expressed in the agreement.

The waiver of rights, actions, and claims covers only those relating to the dispute that gave rise to the settlement.

A compromise entered into by one or some of the interested parties neither binds nor benefits the others unless they accept it.

If a thing that was the subject matter of a compromise proves to belong to another, it is lost for all those who compromised, in proportion to the interest that would have corresponded to each one. The party in whose possession it remained and for whom the thing was lost has the right to have the others with whom it concluded the compromise return to it what it gave for it.

There is ground for warranty in settlements, when one of the parties gives to the other anything that was not the object of the dispute.

Entering into a settlement is prohibited:

1°.Regarding the civil status of persons;

2°.Regarding the validity or nullity of marriage or of divorce;

3°.Regarding criminal liability for crimes giving rise to a procedure on its own initiative; but a settlement may be entered into regarding civil liability arising from the crime;

4°.Regarding the right to receive maintenance; but not regarding the amount of maintenance and past maintenance; and

5°.Regarding what is left by last-will disposition, while the testator or donor is alive.

Representatives of minors, incapacitated persons, or absent persons may not settle with respect to the property of the persons they represent without judicial authorization.

The husband may not, without the wife's consent, nor the latter without that of the former, compromise with respect to the common property.

Those who administer national or municipal property may only enter into a compromise with authorization or approval of the Executive.

Associations shall conform, in order to enter into a compromise, to the law of their creation or to the instrument of their formation or bylaws. In the absence of such provisions, judicial authorization shall be required.

Not even after the minor has reached the age of majority, or the incapacitated person has been rehabilitated, may the guardian enter into a settlement with him concerning the property he administered, if the accounts of the guardianship have not been judicially approved and the legal guarantees have not been canceled.

Depositaries may only compromise with respect to their rights and expenses incurred in the preservation of the deposit, but not with respect to the thing that is the object of the deposit.

For the managing partner or representative to be able to settle with respect to the property or rights belonging to a partnership, express authorization is required.

Special causes of nullity in settlements are:

1°.If concluded by reason of or in view of a void title, and no mention of such nullity was made therein;

2°.If concluded in a matter in which a final judgment had already been rendered and the parties, or one of them, were unaware of it; and

3°.If concluded by virtue of documents subsequently declared false.

The error of calculation in settlements must be corrected and is not cause for nullity.

If the interested parties agree upon an additional penalty in the compromise, it shall not exceed one-fifth of the value of the thing.

The settlement must be drawn up in writing, either in a public deed or in a private document legalized by a notary; or else by means of a judicial record, or a written petition addressed to the judge, whose signatures are authenticated by a notary.