HomeLegal SystemContract Enforcement


There are cases where two parties who do not have ultimate trust in each other would like to engage in a transaction that requires disbursements of assets when certain conditions are met. In such a case, it is possible to use a service called Escrow provided by a trusted third party. The Escrow provider collects assets from one or both parties before the conditions are met, and disburses them as appropriate after they are met.


Reasons for trusting a given escrow service may include their reputation. However, in a scenario where the transaction and escrow service are under the traditional legal system (as opposed to, say, a darknet market), the potential recourse of suing the escrow company if something were to go wrong is likely a factor.


Using an escrow service to manage assets in the agreement is a way of ensuring, with higher certainty than otherwise, that both sides of an agreement are met.



Investopedia article on escrow.

Other Resources

Wikipedia article on Escrow