The Line Between Breach of Contract and the Criminal Offense of Embezzlement in the Management of Sales Proceeds by Sales Representatives

Abstract

The practice of sales representatives failing to remit sales proceeds to the company has become a legal issue that often sparks debate: does this constitute a breach of contract under civil law, or is it a criminal act of embezzlement as defined in Article 374 of the Criminal Code (KUHP)? This study aims to examine the legal parameters that distinguish these two legal categories and to analyze the application of the principle of criminal liability to salespeople who withhold the company’s sales proceeds. The method used is normative legal research employing a statutory, conceptual, and case-based approach. Legal materials were obtained from legislation, court decisions, peer-reviewed legal journals, and selected academic literature. The results of the study indicate that the primary distinction between breach of contract and embezzlement lies in the presence or absence of the element of criminal intent (mens rea) specifically, the intent to unlawfully appropriate property (opzet tot wederrechtelijke toe-eigening) a relationship of trust (vertrouwensrelatie), and the moment of transfer of control over the property. Furthermore, the criminal liability of sales representatives must be based on proof of subjective fault that satisfies the elements of an official misconduct offense under Article 374 of the Criminal Code, not merely on proving a failure to deposit funds. This study concludes that accurately determining the legal classification of a sales representative’s actions requires an in-depth analysis of the legal facts, thereby preventing the criminalization of what are essentially civil relationships.