ESCROW/PAYMASTER SERVICES FOR COMMERCIAL TRANSACTIONS
Commercial transactions with previously unknown participants present a chicken-and-egg problem: Does the buyer send the money for the goods first and hope to receive them as represented, or does the seller send the goods and hope to get paid the agreed-upon amount? This quandary is especially magnified for large transactions.
In addition, other parties may need to be paid out of the proceeds of sale, such as suppliers, brokers, or mineral owners. Even if the buyer and seller trust each other, these other parties may not have the same degree of confidence that they will get paid as agreed.
One way to overcome this dilemma is to use a trusted escrow agent to receive payment from the buyer, pay any necessary third parties to the transaction, and then pay the remaining funds to the seller once the goods have been received in satisfactory condition. Law firms are often chosen for this delicate task due to the fact that lawyers are regulated by the various state attorney licensing authorities, thereby providing assurance to the parties that the monies paid into escrow will be disbursed as agreed.
Escrow services are especially useful for international transactions, given the inability or ineffectiveness of pursuing legal remedies for a breaching (or downright fraudulent) buyer or seller. For this reason, escrow services are often used for the international purchase and sale of commodities, such as crude oil, refined petroleum products, and biofuel feedstock. In these types of transactions, the escrow agent is often referred to as a “paymaster” who handles payments to brokers and other intermediaries as well as ensuring that the commodities are received as contracted and that the seller is paid.
Whitley LLP Attorneys at Law has served as escrow agent/paymaster for many different types of commercial transactions, especially international transactions. We ensure that payments are handled with integrity and in accordance with agreed upon procedures in order to provide assurance to the various parties to the transaction.
Many times Whitley LLP Attorneys at Law is introduced to a transaction and asked to serve as escrow agent by a broker who wants to protect his client, as well as guarantee the payment of his commission. Whitley LLP Attorneys at Law welcomes inquiries from brokers; however, we require direct contact with the ultimate parties to the transaction (buyer and seller) in order to provide a frictionless service. If the seller is a reseller and will be purchasing goods from an ultimate seller in order to fulfill an order, additional checks will be required.
If you would like to discuss Whitley LLP Attorneys at Law providing escrow or paymaster services for your commercial transaction, please contact us.