What is Trade Escrow exactly ?
Trade Escrow is a legal concept in which a financial instrument or an asset is held by a third party on behalf of two other parties that are in the process of completing a transaction. The funds or assets are held by the escrow agent until it receives the appropriate instructions or until predetermined contractual obligations have been fulfilled. Money, securities, funds, and other assets can all be held in escrow. When parties are in the process of completing a transaction, there may come a time when it is only interesting to move forward for one party if it knows with absolute certainty that the other party will be able to fulfill its obligations. This is where the use of escrow comes into play.
Escrow generally refers to money held by a third-party on behalf of transacting parties. Escrow is an account where deposit of funds occurs for payment of certain conditions. The escrow agent has the duty to properly account for the escrow funds and ensure that usage of funds is explicitly for the purpose intended. Since a seller is not willing to take the risk that a buyer will not pay the funds, escrow is usually required under the mortgage terms. Escrow is also commonly used in the transfer of high value business property, like websites and businesses, Goods & Products and in the completion of person-to-person remote auctions (such as eBay), although the advent of new low cost online escrow services has meant that even low cost transactions are now starting to benefit from use of escrow.
There are several applications for having such an Escrow Account. The first application is that between a buyer of certain goods and a supplier thereof. The one would not like to pay without the other having delivered, and the other would rather not deliver until he/she is paid. With an Escrow account, the funds can be frozen, and proof of the availability delivered to the seller (who is thus certain that the money is there) and the funds can be released once the goods or service has actually been delivered. Another application is the freezing of a certain amount of funds for the purpose of demonstrating that the client can deliver these funds, or for in the event something happens to the client and a certain set of payments need to continue.
Why World Trade Escrow ?
Our Trade Escrow solutions are based on two pillars: the presence of a Blockchain platform and an Escrow Account with a partner bank.
An Escrow Account is, in the first place, a bank account held by one or more parties, but managed by a neutral third party. It is opened like a regular bank account, but can only be managed in accordance with instructions provided by the clients - or their agent.
The Trusted Third Party mentioned is, of course, World Trade Escrow (WTE) , which will act as the previously managed agent, and manage the account in accordance with a strict set of instructions as provided by the clients. The main advantage of having a neutral party handle the account, is a reduction to the chance of unpleasant surprises. The agent manages the account, makes sure that all conditions are met and authorizes release of funds based on the meeting of those conditions. One could consider us as international solicitors or notaries.
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