INTRODUCTION AND BRIEF DESCRIPTION
This section explains that if a debtor and creditor account is created with proper entries, no fraudulent conversion can be claimed.
SECTION WORDING
330(2) Where subsection (1) otherwise applies, but one of the terms is that the thing received or the proceeds or part of the proceeds of it shall be an item in a debtor and creditor account between the person who receives the thing and the person to whom he is to account for or to pay it, and that the latter shall rely only on the liability of the other as his debtor in respect thereof, a proper entry in that account of the thing received or the proceeds or part of the proceeds of it, as the case may be, is a sufficient accounting therefor, and no fraudulent conversion of the thing or the proceeds or part of the proceeds of it thereby accounted for shall be deemed to have taken place.
EXPLANATION
Section 330(2) of the Criminal Code of Canada provides an exception to the offence of fraudulent conversion. This offence refers to the act of converting or using the property of someone else without their permission or by misrepresenting the intended use of the property. However, this section allows for a situation where a person receives a thing or proceeds of it as a part of a debtor and creditor account. In this context, the person who receives the thing or proceeds is liable to account for it or pay it to the person to whom it belongs. The person who is supposed to receive the payment is allowed to rely solely on the liability of the receiver as their debtor in this regard. The section further stipulates that if there is a proper entry in the account of the thing received or the proceeds of it, there will be no fraudulent conversion. Therefore, this provision operates as a defence for persons who are acting in a legitimate debtor and creditor relationship, provided that appropriate entries are made in the account. In such a situation, the receiver cannot be charged with fraudulent conversion, even if the thing or proceeds are used for another purpose. However, it is important to note that this defence is limited to the specific circumstances outlined in the provision and does not apply to all cases of fraudulent conversion. Overall, Section 330(2) serves to balance the rights of creditors and debtors in a legitimate debtor and creditor relationship and ensures that fraudulent conversion charges are not brought against the receiver in such situations.
COMMENTARY
Section 330(2) of the Criminal Code of Canada is a provision that applies to situations where there is a debtor and creditor account between two parties, and one of the terms is that the thing received or the proceeds of it shall be an item in that account. This provision essentially creates an exception to subsection (1) of section 330, which criminalizes fraudulent conversion of property. The provision states that if there is a proper entry in the debtor and creditor account that accounts for the thing received or the proceeds of it, then no fraudulent conversion of the thing or the proceeds thereof shall be deemed to have taken place. In other words, if the person who received the thing or proceeds thereof properly accounts for it in the debtor and creditor account, then they cannot be charged with fraudulent conversion under the criminal law. This provision recognizes that in certain business transactions, it is customary for a debtor and creditor account to exist between two parties. These accounts are used to keep track of debts and credits owed between the parties, and are often used in the context of lending money or providing goods or services on credit. Under this provision, if one of the terms of the debtor and creditor account is that the person to whom the thing or proceeds thereof is owed can only rely on the liability of the other party as their debtor, then a proper entry in the account is sufficient to account for the thing or the proceeds thereof. This means that as long as the person who received the thing or proceeds thereof properly accounts for it in the debtor and creditor account, there is no fraudulent conversion under the criminal law. This provision is important because it recognizes that there are legitimate business transactions where a debtor and creditor account is used to keep track of debts and credits owed between parties. It ensures that parties to these transactions are not unfairly penalized under the criminal law for accounting for property in a manner that is customary and reasonable in their business dealings. Overall, section 330(2) of the Criminal Code of Canada is an important provision that recognizes the complexities of business transactions and ensures that parties are not unfairly penalized under the criminal law for legitimate accounting practices.
STRATEGY
Section 330(2) of the Criminal Code of Canada provides for a specific exception to the offense of fraudulent conversion under subsection (1). This section is particularly relevant for individuals engaged in commercial transactions involving debtor and creditor accounts. In such cases, a proper entry in that account of the thing received or the proceeds or part of the proceeds of it is considered a sufficient accounting, and no fraudulent conversion is deemed to have taken place. When dealing with this section, individuals need to consider several strategic considerations. First, they need to ensure that the debtor and creditor account is properly set up and documented. The terms of the account must be clear, and both parties must agree to them. Any changes to the account should be documented and agreed upon by both parties. Another strategic consideration is to maintain accurate records of all transactions. This includes keeping track of all entries made in the account, as well as any other documentation or evidence that may be relevant in case of a dispute. Individuals should also keep copies of all documents relating to the transaction, such as invoices, receipts, and contracts. It is also important to be aware of the limitations of section 330(2). While it provides an exception to the offense of fraudulent conversion, it only applies in certain circumstances. For example, it only applies where the thing received or the proceeds or part of the proceeds of it are entered into a debtor and creditor account. Therefore, individuals should ensure that the transaction meets the requirements of the section before relying on it as a defense. In addition, individuals should consider seeking legal advice before relying on this section. This is particularly important if there is any ambiguity or uncertainty regarding the transaction or the applicability of section 330(2). In terms of strategies that could be employed when dealing with this section, individuals can take several steps to minimize the risk of fraudulent conversion allegations. For example, they can ensure that the debtor and creditor account is properly set up and documented, as mentioned earlier. They can also maintain accurate records of all transactions, including any communication or negotiations leading up to the transaction. Another strategy is to obtain written confirmation of the debtor's agreement to the terms of the account and to any changes made to it. This can be in the form of an email or signed document. By doing so, the parties can avoid disputes over the terms of the account and the validity of any entries made in it. Finally, individuals can consider obtaining a release or waiver from the debtor in respect of any claim for fraudulent conversion. This can provide additional protection against allegations of wrongdoing and increase the likelihood of resolving any disputes amicably. In conclusion, section 330(2) of the Criminal Code of Canada provides an exception to the offense of fraudulent conversion in certain circumstances. However, individuals need to be aware of the limitations of this section and take steps to ensure that their transactions meet its requirements. By employing the right strategies and seeking legal advice when needed, individuals can minimize the risk of fraudulent conversion allegations and protect their business interests.