section 325

INTRODUCTION AND BRIEF DESCRIPTION

This section exempts factors or agents from committing theft when pledging or giving a lien on entrusted goods if the amount does not exceed what is owed to them by their principal.

SECTION WORDING

325 A factor or an agent does not commit theft by pledging or giving a lien on goods or documents of title to goods that are entrusted to him for the purpose of sale or for any other purpose, if the pledge or lien is for an amount that does not exceed the sum of (a) the amount due to him from his principal at the time the goods or documents are pledged or the lien is given; and (b) the amount of any bill of exchange that he has accepted for or on account of his principal.

EXPLANATION

Section 325 of the Criminal Code of Canada exempts factors or agents from committing theft when they pledge or give a lien on goods or documents of title to goods that are entrusted to them for the purpose of sale or for any other purpose. Factors or agents are individuals who act on behalf of a principal, who is usually a business entity or an individual. For instance, a factor may be a person authorized to sell goods owned by another person or a company. The purpose of this section is to provide a defense for factors or agents who may face criminal charges for pledging or giving a lien on goods or documents of title to goods that are entrusted to them if they exceed the amount owed to them by their principal. The defense only applies if the pledge or lien does not exceed the sum of: (a) the amount due to the factor or agent from his or her principal at the time the goods or documents are pledged or the lien is given; (b) the amount of any bill of exchange that the factor or agent has accepted for or on account of his or her principal. Thus, the section protects factors and agents from committing theft when the pledge or lien does not exceed the amount due to them from their principal. However, the section does not provide protection for factors or agents when they pledge or give a lien on goods or documents of title to goods that are entrusted to them for amounts exceeding the sum of (a) and (b). In such cases, factors or agents may be charged with theft under the criminal code of Canada. In summary, section 325 of the Criminal Code of Canada provides a legal protection for factors or agents who pledge or give a lien on goods or documents of title to goods. The provision ensures that factors or agents do not face criminal charges for actions within their legal duties as authorized representatives of their principals. The provision aims to support the development of lawful trade and business transactions.

COMMENTARY

Section 325 of the Criminal Code of Canada deals with the issue of theft by pledging or giving a lien on goods, an act that is widely known as "conversion." Conversion occurs when someone who has been entrusted with property wrongfully disposes of that property, converts it to his or her own use, or pledges it as collateral for a debt. In such cases, the person committing the theft is liable for damages for the value of the goods, along with any additional damages related to the conversion. However, the Criminal Code of Canada gives an exemption to those who pledge or give a lien on goods or documents of title to goods that are entrusted to them for the purpose of sale or for any other purpose. This exemption applies when the pledge or lien is for an amount that does not exceed the sum of the amount due to the factor or agent from the principal at the time the goods or documents are pledged or the lien is given, and the amount of any bill of exchange that the factor or agent has accepted for or on account of the principal. The rationale behind this exemption is that factors or agents are essentially acting on behalf of the principal in their transactions, and are entrusted with the authority to make decisions that would affect the principal's property. The law recognizes that in order to carry out their duties, these factors or agents may occasionally have to pledge or give a lien on some of the principal's property. This exemption is intended to protect them from criminal liability in such situations. While the exemption is limited to the specific circumstances outlined in the section, it is a valuable protection for factors and agents who might otherwise fall afoul of the law. It is important to note, however, that this does not mean that factors or agents can act with impunity and ignore their responsibilities to the principal. They are still bound by fiduciary obligations and are required to act in the principal's best interests. Furthermore, this exemption only applies to the criminal law and does not relieve the factor or agent of civil liability. If a person entrusted with property exceeds the limits of the pledge or lien under Section 325, they may still face civil action from the principal for negligence or breach of trust. In conclusion, Section 325 of the Criminal Code of Canada provides an exemption to factors and agents in limited circumstances. It recognizes that these individuals sometimes need to pledge or give a lien on property to carry out their duties, and that such actions should not be considered theft as long as they stay within the prescribed limits. This exemption is an important recognition of the unique role that factors and agents play in commerce and trade, and is an important protection for those who work in these fields.

STRATEGY

Section 325 of the Criminal Code of Canada is a provision that offers protection for factors or agents who pledge or give a lien on goods or documents of title to goods that are entrusted to them for sale or other purposes. The provision provides a safe harbour for these individuals, making it clear that they do not commit theft if the pledge or lien is in an amount that does not exceed the sum of the amount due to them from their principal and the amount of any bill of exchange accepted by them for or on account of their principal. When dealing with Section 325 of the Criminal Code of Canada, to ensure that they are not found to have committed theft, factors or agents would have to bear in mind the following strategic considerations: 1. Compliance with the Law: While Section 325 of the Criminal Code of Canada is designed to offer protection to factors and agents, it is essential that they comply with the provisions of the law as it relates to the pledging or giving of liens on entrusted goods. The individual must ensure that the amount of the lien does not exceed that allowed by the law. 2. Due Diligence: Factors or agents must exercise due diligence in handling the goods or documents of title to goods entrusted to them. Diligence includes keeping accurate records of the goods if they are sold and the amount owed to them by their principal at the time the goods are pledged. 3. Negotiate Payment Terms: Factors or agents must negotiate payment terms with their principals before pledging the goods or giving a lien. It is vital to ensure that the amount due to them at the time of the pledge or lien does not exceed the amount allowed by law and that the bill of exchange has been accepted on the instruction of the principal. 4. Documentation: The agent or factor must have proper documentation in place to support the pledging of goods or giving of a lien. This includes accurate records of the goods, the time they were sold, and the amount owed to him by the principal. Having accurate documentation will demonstrate due diligence to authorities. 5. Communication: Clear communication with the principal is vital to ensure that the agent or factor is not considered to have committed theft. The principal must be informed of the amount that is being pledged or put under a lien on the goods or the documents of title to the goods. In conclusion, Section 325 of the Criminal Code of Canada provides protection for agents and factors who are entrusted with goods or documents of title to goods. However, to benefit from this provision, these persons must exercise caution and due diligence when dealing with the entrusted goods. Proper documentation, communication, and negotiation of payment terms will ensure that an agent or factor does not commit theft when pledging or giving a lien.