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  "data": {
    "topic": "non-compete",
    "state": "puerto-rico",
    "frontmatter": {
      "title": "Non-Competes in Puerto Rico",
      "description": "Puerto Rico has no non-compete statute; post-employment covenants are enforceable only if they satisfy the strict three-part reasonableness test of Arthur Young & Co. v. Vega III, and courts void rather than rewrite any covenant that falls short.",
      "state": "Puerto Rico",
      "lastReviewed": "2026-06-02",
      "license": "CC BY 4.0",
      "authors": [
        "steven-obiajulu"
      ],
      "summary": {
        "enforceability": "reasonable",
        "bottomLine": "Puerto Rico has no non-compete statute; a covenant is enforceable only if it satisfies the strict three-part Arthur Young reasonableness test — capped at twelve months, supported by real consideration, and in writing — and courts void rather than rewrite any covenant that falls short.",
        "keyLaw": "Arthur Young & Co. v. Vega III, 136 D.P.R. 157 (1994)",
        "exceptions": "Covenants ancillary to a sale of business / ownership exit (e.g. stock-redemption) judged more flexibly than the strict Arthur Young employer-employee test (Reyes Ramis)",
        "courtNarrowing": "no",
        "appliesToContractors": "unclear",
        "extendedForBreach": "Silent — risky if it pushes enforcement past the 12-month ceiling",
        "maxLength": "12 months (additional time excessive and unnecessary)",
        "noticeRequirement": "None",
        "incomeThreshold": "None",
        "saleOfBusiness": "Sale/ownership exits judged more flexibly than Arthur Young employment test",
        "customerNonSolicit": "Reasonableness test applies",
        "employeeNonSolicit": "Reasonableness test applies"
      },
      "about": [
        "Puerto Rico non-compete agreements",
        "Puerto Rico restrictive covenants",
        "Arthur Young & Co. v. Vega III",
        "Puerto Rico Civil Code freedom of contract",
        "Puerto Rico twelve-month non-compete limit",
        "Puerto Rico non-compete consideration",
        "Puerto Rico customer non-solicitation agreements",
        "Puerto Rico non-compete tolling"
      ],
      "translations": [
        {
          "language": "中文",
          "status": "planned"
        },
        {
          "language": "Español",
          "status": "planned"
        },
        {
          "language": "Português",
          "status": "planned"
        },
        {
          "language": "Deutsch",
          "status": "planned"
        }
      ]
    },
    "questions": [
      {
        "slug": "employee-non-compete-enforceability",
        "label": "Are employee non-competes enforceable?",
        "heading": "Are employee non-compete agreements enforceable in Puerto Rico?",
        "answerText": "Sometimes. Puerto Rico has no statute that governs non-competes. As a civil-law jurisdiction, it enforces post-employment covenants only when they satisfy the strict three-part reasonableness test the Puerto Rico Supreme Court announced in Arthur Young & Co. v. Vega III.",
        "sources": [
          {
            "id": "ay-test",
            "authorityType": "case-law",
            "tier": "primary-source-backed",
            "title": "Arthur Young & Co. v. Vega III",
            "citation": "Arthur Young & Co. v. Vega III, 136 D.P.R. 157 (1994).",
            "url": "https://aldia.microjuris.com/wp-content/uploads/2022/09/136DPR157.pdf",
            "proposition": "Arthur Young establishes Puerto Rico's three-part reasonableness test: a non-compete must protect a legitimate employer interest, must not impose too onerous a burden on the employee, and must not unduly harm the public.",
            "verbatimQuote": "Para ser razonable, un acuerdo de no competir debe reunir los siguientes requisitos: (1) debe ser necesario para proteger un interés legítimo del patrono, (2) no debe imponer al empleado una carga demasiado onerosa, (3) y no debe afectar demasiado al público.",
            "date": "1994-05-24",
            "anchor": "https://openagreements.org/practice-guides/non-compete/us/puerto-rico#src-ay-test"
          }
        ]
      },
      {
        "slug": "reasonableness-requirements",
        "label": "What must a valid covenant satisfy?",
        "heading": "What requirements must a Puerto Rico non-compete satisfy?",
        "answerText": "A federal court applying Puerto Rico law restated Arthur Young as a five-element checklist: a legitimate employer interest, a scope that fits that interest and does not exceed twelve months, consideration beyond mere job tenure, a valid underlying contract, and a writing.",
        "sources": [
          {
            "id": "sc-elements",
            "authorityType": "case-law",
            "tier": "primary-source-backed",
            "title": "Smarte Carte, Inc. v. Colón",
            "citation": "Smarte Carte, Inc. v. Colón, 47 F. Supp. 2d 183 (D.P.R. 1999).",
            "url": "https://www.courtlistener.com/opinion/2527549/smarte-carte-inc-v-colon/",
            "deepLink": "https://www.courtlistener.com/opinion/2527549/smarte-carte-inc-v-colon/#:~:text=The%20elements%20of%20a%20valid,covenants%20must%20be%20in%20writing.",
            "proposition": "Smarte Carte restates the Arthur Young elements of a valid Puerto Rico non-compete, including that the scope not exceed twelve months and that consideration be other than mere job tenure.",
            "verbatimQuote": "The elements of a valid non-competition agreement in Puerto Rico as set forth in Arthur Young are: (1.) The employer must have a legitimate interest in the agreement; (2.)the scope of the prohibition must fit the employer's interest but not exceed twelve months; (3.) The employer shall offer a consideration in exchange for the employee signing the non-competition covenant other than mere job tenure; (4.) Non-competition agreements must be valid contracts; (5.) Non-competition covenants must be in writing.",
            "date": "1999-03-19",
            "anchor": "https://openagreements.org/practice-guides/non-compete/us/puerto-rico#src-sc-elements"
          },
          {
            "id": "ay-duration",
            "authorityType": "case-law",
            "tier": "primary-source-backed",
            "title": "Arthur Young & Co. v. Vega III",
            "citation": "Arthur Young & Co. v. Vega III, 136 D.P.R. 157 (1994).",
            "url": "https://aldia.microjuris.com/wp-content/uploads/2022/09/136DPR157.pdf",
            "proposition": "Arthur Young sets a twelve-month ceiling on the duration of a non-competition term and treats any longer period as excessive and unnecessary to protect the employer.",
            "verbatimQuote": "El término de no competencia no debe exceder de doce meses, entendiéndose que cualquier tiempo adicional es excesivo e innecesario para proteger adecuadamente al patrono.",
            "date": "1994-05-24",
            "anchor": "https://openagreements.org/practice-guides/non-compete/us/puerto-rico#src-ay-duration"
          },
          {
            "id": "ay-writing",
            "authorityType": "case-law",
            "tier": "primary-source-backed",
            "title": "Arthur Young & Co. v. Vega III",
            "citation": "Arthur Young & Co. v. Vega III, 136 D.P.R. 157 (1994).",
            "url": "https://aldia.microjuris.com/wp-content/uploads/2022/09/136DPR157.pdf",
            "proposition": "Arthur Young requires that a non-competition agreement be set out in writing.",
            "verbatimQuote": "Finalmente, es indispensable que los pactos de no competencia consten por escrito.",
            "date": "1994-05-24",
            "anchor": "https://openagreements.org/practice-guides/non-compete/us/puerto-rico#src-ay-writing"
          }
        ]
      },
      {
        "slug": "court-narrowing",
        "label": "Will courts narrow an overbroad covenant?",
        "heading": "Will Puerto Rico courts narrow an overbroad non-compete?",
        "answerText": "No. Arthur Young directs courts to declare an overbroad covenant null rather than modify the parties' agreement to make it reasonable.",
        "sources": [
          {
            "id": "ay-nullity",
            "authorityType": "case-law",
            "tier": "primary-source-backed",
            "title": "Arthur Young & Co. v. Vega III",
            "citation": "Arthur Young & Co. v. Vega III, 136 D.P.R. 157 (1994).",
            "url": "https://aldia.microjuris.com/wp-content/uploads/2022/09/136DPR157.pdf",
            "proposition": "Arthur Young directs courts to declare null any non-compete that fails the requirements, rather than modifying the parties' agreement to make it reasonable.",
            "verbatimQuote": "Por tal razón, en vez de modificar la voluntad de las partes para ajustarla a normas razonables, se declarará nulo todo pacto de no competir que no cumpla con las anteriores condiciones.",
            "date": "1994-05-24",
            "anchor": "https://openagreements.org/practice-guides/non-compete/us/puerto-rico#src-ay-nullity"
          },
          {
            "id": "paciv-nullity",
            "authorityType": "case-law",
            "tier": "primary-source-backed",
            "title": "PACIV, Inc. v. Pérez Rivera",
            "citation": "PACIV, Inc. v. Pérez Rivera, 159 D.P.R. 523 (2003).",
            "url": "https://www.lexjuris.com/LEXJURIS/tspr2003/lexj2003084.htm",
            "proposition": "PACIV holds that once any one of the established requirements is breached, the non-competition agreement is null in its entirety.",
            "verbatimQuote": "Una vez se incumple con alguno de los requisitos establecidos en nuestra jurisprudencia, el acuerdo es nulo en su totalidad.",
            "date": "2003-05-19",
            "anchor": "https://openagreements.org/practice-guides/non-compete/us/puerto-rico#src-paciv-nullity"
          },
          {
            "id": "tls-decline",
            "authorityType": "case-law",
            "tier": "primary-source-backed",
            "title": "TLS Management & Marketing Services, LLC v. Rodríguez-Toledo",
            "citation": "TLS Mgmt. & Mktg. Servs., LLC v. Rodríguez-Toledo, 966 F.3d 46 (1st Cir. 2020).",
            "url": "https://www.courtlistener.com/opinion/4769672/tls-mgmt-and-mktg-ser-llc-v-rodriguez-toledo/",
            "deepLink": "https://www.courtlistener.com/opinion/4769672/tls-mgmt-and-mktg-ser-llc-v-rodriguez-toledo/#:~:text=We%20decline%20to%20rewrite%20the,their%20scope%20to%20be%20reasonable.",
            "proposition": "TLS Management shows the First Circuit declining to rewrite overbroad agreements to a reasonable scope under Puerto Rico law.",
            "verbatimQuote": "We decline to rewrite the nondisclosure agreements by narrowing their scope to be reasonable.",
            "date": "2020-07-21",
            "anchor": "https://openagreements.org/practice-guides/non-compete/us/puerto-rico#src-tls-decline"
          },
          {
            "id": "sc-noreform",
            "authorityType": "case-law",
            "tier": "primary-source-backed",
            "title": "Smarte Carte, Inc. v. Colón",
            "citation": "Smarte Carte, Inc. v. Colón, 47 F. Supp. 2d 183 (D.P.R. 1999).",
            "url": "https://www.courtlistener.com/opinion/2527549/smarte-carte-inc-v-colon/",
            "deepLink": "https://www.courtlistener.com/opinion/2527549/smarte-carte-inc-v-colon/#:~:text=This%20invalidation%20is%20strictly%20enforced%2C,order%20to%20modify%20the%20provision.",
            "proposition": "Smarte Carte explains that Puerto Rico's invalidation rule is strictly enforced and courts may not apply a common-law reasonableness rule to modify the provision.",
            "verbatimQuote": "This invalidation is strictly enforced, and courts are instructed not to apply the common law rule of reasonableness in order to modify the provision.",
            "date": "1999-03-19",
            "anchor": "https://openagreements.org/practice-guides/non-compete/us/puerto-rico#src-sc-noreform"
          }
        ]
      },
      {
        "slug": "consideration",
        "label": "What consideration is required?",
        "heading": "What consideration supports a Puerto Rico non-compete?",
        "answerText": "Real consideration is required, and continued employment alone does not count. Arthur Young holds that mere continued employment will not be accepted as the consideration for a non-compete.",
        "sources": [
          {
            "id": "ay-consideration",
            "authorityType": "case-law",
            "tier": "primary-source-backed",
            "title": "Arthur Young & Co. v. Vega III",
            "citation": "Arthur Young & Co. v. Vega III, 136 D.P.R. 157 (1994).",
            "url": "https://aldia.microjuris.com/wp-content/uploads/2022/09/136DPR157.pdf",
            "proposition": "Arthur Young holds that mere continued employment will not be accepted as the consideration for a non-competition agreement.",
            "verbatimQuote": "Sin embargo, no se admitirá como causa del acuerdo de no competencia la mera permanencia en el empleo.",
            "date": "1994-05-24",
            "anchor": "https://openagreements.org/practice-guides/non-compete/us/puerto-rico#src-ay-consideration"
          },
          {
            "id": "cherena-timing",
            "authorityType": "case-law",
            "tier": "primary-source-backed",
            "title": "Cherena v. Coors Brewing Co.",
            "citation": "Cherena v. Coors Brewing Co., 20 F. Supp. 2d 282 (D.P.R. 1998).",
            "url": "https://www.courtlistener.com/opinion/2423610/cherena-v-coors-brewing-co/",
            "deepLink": "https://www.courtlistener.com/opinion/2423610/cherena-v-coors-brewing-co/#:~:text=Such%20a%20consideration%20in%20this,moment%20of%20discharge%20from%20employment.",
            "proposition": "Cherena holds that consideration for a Puerto Rico non-compete must be given when the agreement is entered into, not at the moment of discharge.",
            "verbatimQuote": "Such a consideration in this jurisdiction must be forthcoming at the moment the agreement was entered into and not at the moment of discharge from employment.",
            "date": "1998-08-07",
            "anchor": "https://openagreements.org/practice-guides/non-compete/us/puerto-rico#src-cherena-timing"
          },
          {
            "id": "soto-scope",
            "authorityType": "case-law",
            "tier": "primary-source-backed",
            "title": "Soto v. State Industrial Products, Inc.",
            "citation": "Soto v. State Indus. Prods., Inc., 642 F.3d 67 (1st Cir. 2011).",
            "url": "https://www.courtlistener.com/opinion/214787/soto-v-state-industrial-products-inc/",
            "deepLink": "https://www.courtlistener.com/opinion/214787/soto-v-state-industrial-products-inc/#:~:text=For%20these%20reasons%2C%20we%20reject,consideration%20for%20an%20arbitration%20agreement.",
            "proposition": "Soto declines to expand Arthur Young's special non-compete consideration rule to hold that continued employment cannot constitute valid consideration for an arbitration agreement.",
            "verbatimQuote": "For these reasons, we reject Soto's invitation to expand the scope of Arthur Young to hold that continued employment cannot constitute valid consideration for an arbitration agreement.",
            "date": "2011-04-15",
            "anchor": "https://openagreements.org/practice-guides/non-compete/us/puerto-rico#src-soto-scope"
          }
        ]
      },
      {
        "slug": "other-covenants",
        "label": "How are NDAs and non-solicits treated?",
        "heading": "How does Puerto Rico treat NDAs, non-solicits, and confidentiality clauses?",
        "answerText": "A confidentiality or non-solicitation clause that operates like a disguised non-compete is judged by the same Arthur Young standard. In TLS Management, an overbroad nondisclosure agreement was unenforceable because it functioned as a de facto non-compete.",
        "sources": [
          {
            "id": "tls-decline-2",
            "authorityType": "case-law",
            "tier": "primary-source-backed",
            "title": "TLS Management & Marketing Services, LLC v. Rodríguez-Toledo",
            "citation": "TLS Mgmt. & Mktg. Servs., LLC v. Rodríguez-Toledo, 966 F.3d 46 (1st Cir. 2020).",
            "url": "https://www.courtlistener.com/opinion/4769672/tls-mgmt-and-mktg-ser-llc-v-rodriguez-toledo/",
            "deepLink": "https://www.courtlistener.com/opinion/4769672/tls-mgmt-and-mktg-ser-llc-v-rodriguez-toledo/#:~:text=We%20decline%20to%20rewrite%20the,their%20scope%20to%20be%20reasonable.",
            "proposition": "TLS Management treats an overbroad nondisclosure agreement as a de facto non-compete and declines to rewrite it to a reasonable scope.",
            "verbatimQuote": "We decline to rewrite the nondisclosure agreements by narrowing their scope to be reasonable.",
            "date": "2020-07-21",
            "anchor": "https://openagreements.org/practice-guides/non-compete/us/puerto-rico#src-tls-decline-2"
          },
          {
            "id": "cherena-severable",
            "authorityType": "case-law",
            "tier": "primary-source-backed",
            "title": "Cherena v. Coors Brewing Co.",
            "citation": "Cherena v. Coors Brewing Co., 20 F. Supp. 2d 282 (D.P.R. 1998).",
            "url": "https://www.courtlistener.com/opinion/2423610/cherena-v-coors-brewing-co/",
            "deepLink": "https://www.courtlistener.com/opinion/2423610/cherena-v-coors-brewing-co/#:~:text=Thus%2C%20although%20the%20non%2Dcompetition%20clause,provisions%2C%20are%20valid%20and%20enforceable.",
            "proposition": "Cherena voids the non-compete but holds the agreement's separate non-disclosure provisions valid and enforceable.",
            "verbatimQuote": "Thus, although the non-competition clause is null and void, the rest of the provisions contained in the Agreement, including the non-disclosure provisions, are valid and enforceable.",
            "date": "1998-08-07",
            "anchor": "https://openagreements.org/practice-guides/non-compete/us/puerto-rico#src-cherena-severable"
          }
        ]
      },
      {
        "slug": "scope-territory-clients",
        "label": "How specific must the scope be?",
        "heading": "How specific must the geographic and customer scope be?",
        "answerText": "A covenant does not need both a geographic limit and a customer limit; one of them suffices. In Reyes Ramis CPA Group, P.S.C. v. Serra Torres, the Supreme Court held that it is not correct to require every non-compete to contain both a territorial and a client restriction.",
        "sources": [
          {
            "id": "rr-disjunctive",
            "authorityType": "case-law",
            "tier": "primary-source-backed",
            "title": "Reyes Ramis CPA Group, P.S.C. v. Serra Torres",
            "citation": "Reyes Ramis CPA Group, P.S.C. v. Serra Torres, 194 D.P.R. ___ (2016).",
            "url": "http://www.lexjuris.com/lexjuris/tspr2016/lexj2016126.htm",
            "proposition": "Reyes Ramis holds that a non-compete need not contain both a territorial and a client restriction; one of them suffices.",
            "verbatimQuote": "Por lo tanto, no es correcto afirmar que todo contrato de no competencia debe contener una restricción territorial y de clientela, basta con una de ellas.",
            "date": "2016-06-17",
            "anchor": "https://openagreements.org/practice-guides/non-compete/us/puerto-rico#src-rr-disjunctive"
          },
          {
            "id": "rr-scope",
            "authorityType": "case-law",
            "tier": "primary-source-backed",
            "title": "Reyes Ramis CPA Group, P.S.C. v. Serra Torres",
            "citation": "Reyes Ramis CPA Group, P.S.C. v. Serra Torres, 194 D.P.R. ___ (2016).",
            "url": "http://www.lexjuris.com/lexjuris/tspr2016/lexj2016126.htm",
            "proposition": "Reyes Ramis clarifies that the Court did not make a combined geographic-and-client limitation a constitutive requirement of a valid non-compete.",
            "verbatimQuote": "No obstante, es importante destacar que esta Curia no estableció como requisito constitutivo de un acuerdo de no competencia el que se limite geográficamente las restricciones impuestas y los clientes que estarán comprendidos.",
            "date": "2016-06-17",
            "anchor": "https://openagreements.org/practice-guides/non-compete/us/puerto-rico#src-rr-scope"
          },
          {
            "id": "rr-stock",
            "authorityType": "case-law",
            "tier": "primary-source-backed",
            "title": "Reyes Ramis CPA Group, P.S.C. v. Serra Torres",
            "citation": "Reyes Ramis CPA Group, P.S.C. v. Serra Torres, 194 D.P.R. ___ (2016).",
            "url": "http://www.lexjuris.com/lexjuris/tspr2016/lexj2016126.htm",
            "proposition": "Reyes Ramis holds that a non-compete tied to a stock-redemption arrangement did not have to conform fully to the strict Arthur Young conditions that govern employer-employee covenants.",
            "verbatimQuote": "Por lo tanto, contrario a la conclusión a la que llegaron los foros inferiores, la cláusula de no competencia bajo análisis no tenía que ajustarse íntegramente a las estrictas condiciones establecidas en Arthur Young & Co. v. Vega III , supra.",
            "date": "2016-06-17",
            "anchor": "https://openagreements.org/practice-guides/non-compete/us/puerto-rico#src-rr-stock"
          }
        ]
      },
      {
        "slug": "extended-for-breach",
        "label": "Does the period toll during breach?",
        "heading": "Does the restricted period toll or extend if the employee breaches?",
        "answerText": "Puerto Rico primary law is silent. No Puerto Rico Supreme Court, Court of Appeals, federal district, or First Circuit decision squarely approves or rejects either a contractual extension-on-breach clause or a court-ordered equitable extension of a Puerto Rico non-compete. The safest assumption is that a court will hold the employer to the twelve-month ceiling.",
        "sources": [
          {
            "id": "emc-contract",
            "authorityType": "case-law",
            "tier": "primary-source-backed",
            "title": "EMC Corp. v. Arturi",
            "citation": "EMC Corp. v. Arturi, 655 F.3d 75 (1st Cir. 2011).",
            "url": "https://www.courtlistener.com/opinion/612666/emc-corp-v-arturi/",
            "deepLink": "https://www.courtlistener.com/opinion/612666/emc-corp-v-arturi/#:~:text=Being%20forewarned%2C%20EMC%20could%20have,upon%20preliminary%20finding%20of%20breach.",
            "proposition": "EMC v. Arturi, applying Massachusetts law, declines to equitably extend a non-compete after its term expired and notes the employer could have contracted for tolling during litigation. It is persuasive authority only, not Puerto Rico law.",
            "verbatimQuote": "Being forewarned, EMC could have contracted, as the district judge noted, for tolling the term of the restriction during litigation, or for a period of restriction to commence upon preliminary finding of breach.",
            "date": "2011-08-26",
            "anchor": "https://openagreements.org/practice-guides/non-compete/us/puerto-rico#src-emc-contract"
          },
          {
            "id": "ay-duration-2",
            "authorityType": "case-law",
            "tier": "primary-source-backed",
            "title": "Arthur Young & Co. v. Vega III",
            "citation": "Arthur Young & Co. v. Vega III, 136 D.P.R. 157 (1994).",
            "url": "https://aldia.microjuris.com/wp-content/uploads/2022/09/136DPR157.pdf",
            "proposition": "Arthur Young's twelve-month ceiling treats any additional time as excessive, which is why a tolling clause that extends enforcement past twelve months is risky in Puerto Rico.",
            "verbatimQuote": "El término de no competencia no debe exceder de doce meses, entendiéndose que cualquier tiempo adicional es excesivo e innecesario para proteger adecuadamente al patrono.",
            "date": "1994-05-24",
            "anchor": "https://openagreements.org/practice-guides/non-compete/us/puerto-rico#src-ay-duration-2"
          }
        ]
      },
      {
        "slug": "recent-developments",
        "label": "What recent changes matter?",
        "heading": "What recent developments should employers monitor?",
        "answerText": "As of June 2, 2026, the governing framework remains the Arthur Young line of cases. The Supreme Court last restated and refined that test in Reyes Ramis in 2016, and no Puerto Rico statute has displaced it.",
        "sources": [
          {
            "id": "rr-current",
            "authorityType": "case-law",
            "tier": "primary-source-backed",
            "title": "Reyes Ramis CPA Group, P.S.C. v. Serra Torres",
            "citation": "Reyes Ramis CPA Group, P.S.C. v. Serra Torres, 194 D.P.R. ___ (2016).",
            "url": "http://www.lexjuris.com/lexjuris/tspr2016/lexj2016126.htm",
            "proposition": "Reyes Ramis is the most recent Puerto Rico Supreme Court restatement of the Arthur Young test and remains the governing framework as of 2026.",
            "verbatimQuote": "Por lo tanto, no es correcto afirmar que todo contrato de no competencia debe contener una restricción territorial y de clientela, basta con una de ellas.",
            "date": "2016-06-17",
            "anchor": "https://openagreements.org/practice-guides/non-compete/us/puerto-rico#src-rr-current"
          }
        ]
      }
    ]
  }
}
