Alignment, Value And Risks: Escrow Agents In Financial Transactions

Introduction

Generally, markets can be very volatile and often bring risks in the course of financial transactions; on large scale deals, you may wonder if you can trust your counterparty (ies), prudence always impels 'caveat emptor'! It is therefore necessary to employ deal execution approaches that will help reduce transaction risks. The aim of this article is to analyse how the use of escrow agents (EAs) could help manage and minimise risk exposure in financial transactions, thereby protecting the parties' interest and promoting their business objective.

Agents are best described as 'conduit pipes' in commercial transactions. An agent is the ultimate middle man who ensures that interaction between two or more parties equals an exchange in goods or services of value. Agents can be appointed expressly (oral or written) or impliedly to act for another (the principal), within the scope of authority delegated to him.