INTRODUCTION AND BRIEF DESCRIPTION
Section 332(2) exempts transactions between parties who are in a debtor and creditor relationship, unless the direction to apply the payment to the proceeds of crime is given in writing.
SECTION WORDING
332(2) This section does not apply where a person who receives anything mentioned in subsection (1) and the person from whom he receives it deal with each other on such terms that all money paid to the former would, in the absence of any such direction, be properly treated as an item in a debtor and creditor account between them, unless the direction is in writing.
EXPLANATION
Section 332(2) of the Criminal Code of Canada is a provision that provides an exception to the offence of accepting a bribe. Bribery is a serious offence that occurs when a person offers or accepts a benefit in exchange for an action that is illegal or unethical. In general, bribery undermines public trust and can lead to a culture of corruption in society. However, there are situations where a person may receive something of value from another person, but it may not necessarily be considered a bribe. Section 332(2) of the Criminal Code of Canada provides an exception to the offence of bribery if the person who receives the benefit and the person who gives it have an existing debtor and creditor relationship. This means that if the two parties already have an agreement in place whereby one owes the other money, then any money paid by the second party to the first can be treated as part of that debt. In such a case, no direction needs to be given in writing, as the arrangement between them is clear. For example, if a businessman owes a contractor $10,000 for work done, and the contractor offers to pay the businessman $2,000 for a service that is not related to the contract, such payment would not be considered a bribe under Section 332(2). This is because the $2,000 can be treated as part of the debt owed by the businessman to the contractor. It is important to note that this exception only applies when there is an existing debtor and creditor relationship between the parties, and there must be clear evidence of this relationship. If there is no evidence of such a relationship, any benefit received may be considered a bribe. Additionally, if there is an element of corruption in the relationship, the exception will not apply. In summary, Section 332(2) of the Criminal Code of Canada provides an exception to the offence of bribery in cases where the recipient and the giver of a benefit have an existing debtor and creditor relationship. This section limits the scope of the offence of bribery and provides clarity to the nature of relationships in which benefits can be received without being considered corrupt.
COMMENTARY
Section 332(2) of the Criminal Code of Canada is an important provision in the legislation that deals with the offence of theft by conversion. The section sets out an exception to the offence of theft by conversion where a person receives anything that is mentioned in subsection (1) of the section, and the person from whom they receive it deals with them on such terms that all money paid to the former would, in the absence of any direction, be properly treated as an item in a debtor and creditor account between them. This exception, however, is subject to one important condition - the direction must be in writing. The purpose of this provision is to prevent a debtor from being prosecuted for theft by conversion where they receive money from a creditor under an agreement that the money will be treated as a payment towards a debt owed by the debtor to the creditor. For example, if A owed B $100 for goods or services rendered, and B paid A $100 in cash, A could not be prosecuted for theft by conversion if both parties had agreed that the payment would be treated as a payment towards the debt. The important requirement is that the agreement must be in writing, which means that it must be clear and unambiguous. This provision is a necessary addition to the Criminal Code as it recognizes the reality of commercial transactions and the way in which debts are often settled between parties. The provision ensures that a debtor cannot be prosecuted for theft by conversion where a creditor has paid them money towards a debt owed. It is important to note, however, that the exception only applies where the parties have a pre-existing relationship where debts are owed, as the section explicitly requires that the payment would, in the absence of any direction, be properly treated as an item in a debtor and creditor account between them. The provision does not apply to situations where there is no pre-existing relationship between the parties. The requirement of a written agreement is also important as it ensures that there is a clear record of the agreement between the parties. A written agreement provides evidence of the terms agreed upon by the parties and can be used to prove that a debtor is not guilty of theft by conversion when the payment received was intended to be treated as a payment towards a debt. This helps to prevent disputes from arising between parties and ensures that there is certainty in commercial transactions. In conclusion, section 332(2) of the Criminal Code of Canada is an important provision that recognizes the reality of commercial transactions and the way in which debts are often settled between parties. It provides an exception to the offence of theft by conversion where a debtor receives money from a creditor towards a debt and ensures that the debtor cannot be prosecuted for theft by conversion in such circumstances. The requirement for a written agreement is important as it ensures that there is a clear record of the agreement between the parties and can be used as evidence to prove that a debtor is not guilty of the offence of theft by conversion.
STRATEGY
Section 332(2) of the Criminal Code of Canada provides an exception to the offence of bribery. This exception states that the offence of bribery does not apply where the person who receives the benefit and the person who provides it deal with each other on such terms that all money paid to the former would, in the absence of any such direction, be correctly accounted for as an item in a debtor and creditor account between them, unless the direction is in writing. This exception is crucial in determining the legal validity of various transactions, especially in the context of business dealings. However, with this exception comes strategic considerations that businesses need to consider in their daily operations. Here are some of the strategic considerations when dealing with this section of the Criminal Code of Canada. Written Agreement As per the section, for the exception to be valid, a written agreement that outlines the directions is required. Therefore, when dealing with business partners or clients, businesses should ensure that they have a clear and written agreement with their counterparties, even when providing benefits that may seem to fall within the scope of bribery. In this situation, businesses should ensure that the agreement clearly outlines the terms of the transaction, including the details of the benefit, the terms of payment, and the timing of the payment. Additionally, both parties should sign the agreement to ensure mutual accountability. Verbal Agreements While written agreements provide security, strategic considerations need to be made when dealing with verbal agreements. In this situation, businesses should ensure that they document any verbal communication with the counterparty, including recording the conversation if possible. This may prove fundamental in court cases where the legality of such transactions is called into question. When dealing with verbal agreements, businesses should also ensure that they have the right witnesses who can corroborate their evidence. Terms of Payment When making payments that could be considered bribes, businesses should ensure that the terms of payment made are similar to any other payment terms agreed upon with customers or clients. Therefore, the payment structure should be transparent, including the description of the payment, how it will be made, and when it will be made. Additionally, businesses should ensure that any payments made should not be beyond what is reasonable and common in the given market, as this could raise suspicions that the payment may indeed be a bribe. Establishing A Compliance Program To avoid running afoul of the bribery and corruption laws in Canada, businesses need to establish a compliance program that aims to identify and prevent any fraudulent activity within the organization. This compliance program should aim to educate employees on the laws surrounding corruption, their responsibilities at the workplace, and the need to report any suspicious activity. Additionally, the program should be reviewed regularly to ensure that it is updated to reflect any changes in the laws relating to bribery and other fraudulent activities. Conclusion The exception provided in section 332(2) of the Criminal Code of Canada provides a means for businesses to deal with gratuities without being liable for bribery. However, strategic considerations need to be made to ensure that any arrangements made are valid and legal. Therefore, businesses should ensure they have clearly written agreements in place, document verbal agreements, establish transparent payment terms, and establish a compliance program that mitigates the risks of fraudulent activity within the organization. Overall, businesses should undertake due diligence when engaging in any activity that involves payments to third parties to avoid being caught on the wrong side of the law.