Escrow Sale of Goods Agreement with Delivery and Payment Terms
This Escrow Sale of Goods Agreement with Delivery and Payment Terms is designed to be used in connection with a sale of goods.
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The buyer and seller may decide to appoint an escrow agent where they wish to reduce the risk that arises because they do not know each other well (or at all) and consequently are not able to trust each other. The risk for the seller is that he may not be able to recover the price from the buyer after delivery of the goods. The risk for the buyer is that he might not receive the goods from the seller before he makes payment.
Appointment of an escrow agent as an intermediary of the buyer and seller under this template helps to minimise the risk for the seller in that he only has to deliver the goods after he knows that the buyer has paid over the purchase money to the escrow agent, and it helps to minimise the risk for the buyer in that the escrow agent only releases the price to the seller after the buyer receives delivery. If the seller does not deliver or properly attempt to do so, the price is returned to the buyer by the escrow agent.
However, this template will not be suitable where the buyer is not only or mainly concerned with the risk of non-delivery, but instead about the quality or other aspects of the goods. In that case one of our other sale of goods escrow agreements in this subfolder should be used instead. The Escrow Sale of Goods Agreement with Warranty and Payment Terms template requires the escrow agent not to release payment to the seller unless the goods conform to the warranty in the sale contract for a stated period (e.g. 90 days) and the Escrow Sale of Goods Agreement with Inspection and Payment Terms template requires the escrow agent not to release payment to the seller unless within a stated period (e.g. 7 days, or 30 days where the buyer is a consumer) the buyer has had an opportunity to inspect the goods and check that they conform to the warranty in the sale contract.
The escrow agent is an independent entity trusted by both seller and buyer and is appointed by them under this template as the agent of both of them. The agent may charge fees and/or expenses at a commercial rate, or may instead accept a small or no fee. Our template assumes that at least some fee will be charged.
The agent may be any of the following;
- an individual
- two or more individuals acting jointly
- a company, firm, or institution which routinely provides escrow services in connection with sales of goods
- a professional firm (or two firms acting jointly), for example, a firm of accountants or solicitors), which agrees to provide an escrow service to professional clients
- an institution (e.g. bank) which is prepared to act as escrow agent on a one-off basis.
This Escrow Sale of Goods Agreement with Delivery and Payment Terms template may be used with a contract for sale of new or second hand goods of any description. It is not specifically designed for any particular type of goods but, for example, it might typically be used for sale of a second hand vehicle. Since the agreement is designed for goods of relatively high value, e.g. several thousand pounds or more, we have included terms to cover all of the most important issues which might arise. For lower value goods, or where any or all of the three parties require a much simpler document, a shorter agreement may be used but care should be taken before deleting any provisions from this template.
This agreement is suitable for a sale in any of the following case:
- the seller is a private individual selling to a consumer/private individual (i.e. neither of them are dealers or act in the course of other business)
- both are in business
- the seller is in business and the buyer is a consumer/private individual
- the seller is a consumer/private individual and the buyer is in business.
Note that paragraph “B” of the template anticipates that the sale contract will be drafted to state that it does not require the seller and buyer to enter into any escrow agreement but that if they do not do so within a stated time, the sale contract will not have any legal effect (i.e. there is no sale).
This template is only suitable for use where all three parties are based and operate in the UK, and payment and delivery of goods are to be in the UK.
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