Often, issues of debt or unfulfilled agreements (wanprestasi or breach of contract) are wrongly steered into the criminal realm, as if they were fraud. As a result, many people who should be facing civil matters end up in prison. This article will explain why this is wrong, what the difference is between breach of contract and fraud, how these issues should be resolved, and why this criminalization violates human rights. The goal is for all of us to better understand and avoid missteps when facing legal problems.
Ever heard stories of people jailed for not being able to pay their debts? Or business failures that lead to police reports because of accusations of fraud? This isn’t uncommon in Indonesia. Our country adheres to a legal system that clearly separates civil matters (between individuals, like agreements) and criminal matters (crimes that disturb public order). However, in practice, this boundary often becomes blurred.
Many law enforcement officials mistakenly, or even intentionally, criminalize civil matters like “wanprestasi” (breach of contract) as “fraud.” Yet, the intent and sanctions are vastly different. Consequently, instead of seeking civil solutions like compensation, problems become complicated in the criminal domain, harming a person’s human right not to be imprisoned merely for debt issues.
This article will thoroughly explore:
- What’s the difference between breach of contract (wanprestasi) and fraud?
- How to claim civil compensation if the case has already gone criminal?
- Why imprisoning someone for breach of contract is a human rights violation?
Let’s discuss this to prevent anyone else from getting caught in a detrimental cycle of criminalization.
The Fine Line: Breach of Contract (Wanprestasi) vs. Fraud
Distinguishing between breach of contract, fraud, and embezzlement is key. Let’s use simple analogies:
Embezzlement:
- Initially lawful possession: Your goods or money are legitimately in someone else’s hands (e.g., entrusted, borrowed).
- Malicious intent later: The person only intends to “take possession” of the goods/money after it’s in their hands. Example: You entrust your car to a friend, but they secretly sell it.
Fraud:
- Malicious intent from the start: From the beginning, the person intended to gain illicitly.
- Uses deception: They use lies, false promises, fake names, or other cunning methods to make you hand over something (money, goods, or even waive your debt). Example: Someone claims to have a big project, asks for investment with promises of fantastic profits, but their intention was just to take your money from the start.
Breach of Contract (Wanprestasi):
- Initially good faith: There’s a valid agreement made in good faith between both parties.
- Good intent initially, but unable to fulfill: One party is unable or unwilling to fulfill their promise. This can be for various reasons, not always due to malicious intent.
- Not a crime: There’s no element of criminal “unlawfulness,” only a “breach of agreement” that binds both parties. Example: You order goods, but the seller doesn’t deliver on time due to production issues. This is a civil matter, not criminal.
In essence:
- Fraud: Involves malicious intent from the start and cunning methods to gain from you.
- Breach of Contract: No malicious intent at the start, just a failure to fulfill a promise in a previously valid agreement.
Sanctions:
- Breach of Contract: Resolved civilly. Can be sued to fulfill the promise, pay compensation (actual losses), penalties, or interest. No imprisonment.
- Fraud: Falls under criminal law. The perpetrator can be imprisoned.
Getting Your Money Back: Can It Happen in Criminal Cases?
If a case has already been criminalized, can we get our money back? In the past, before the Criminal Procedure Code (KUHAP) existed, judges could order the defendant to return money as a “special condition” for the defendant not to be imprisoned. But the Supreme Court often overturned such rulings because they were deemed to mix criminal and civil matters.
Now, the rules are clearer:
- Claim for Damages in Criminal Trials: You can file a claim for material damages (losses that can be quantified in money) during a criminal trial. However, this must be filed before the prosecutor reads their indictment.
- Separate Civil Lawsuit: For broader compensation (including costs and interest) or if you’re too late to file in the criminal trial, you can still pursue it civilly through a separate civil court after the criminal case concludes and a permanent ruling is issued.
So, even if the case has become criminal, avenues to recover material losses still exist, either through a slight opening in the criminal trial or a separate civil route.
Criminalization of Breach of Contract: A Human Rights Violation?
Why is criminalizing someone for breach of contract a big problem? Because it violates human rights.
Imagine: You can’t fulfill contractual obligations because your business went bankrupt, or due to unforeseen circumstances. This should be resolved through deliberation or in a civil court to find the best solution (e.g., installments, compensation according to ability). But if it’s immediately criminalized, you could be imprisoned simply for being unable to pay a debt or fulfill a promise.
However, there are international agreements and Human Rights Laws in Indonesia that explicitly state: “No one shall be imprisoned merely on the ground of inability to fulfill a contractual obligation.” This means that issues of debt or breach of contract should not lead to incarceration, unless there was indeed an initial intent to defraud.
The criminalization of breach of contract is not only unjust but also hinders the business and investment climate. People become afraid to do business or enter into agreements because of the risk of imprisonment if they fail, even though business failure is a normal occurrence.
By: Dr. Dr. Yonatan, SH, S.Kom, SE, MAF, M.Kn
