In breaking down an escrow agreement, one has to understand the legal connotation behind the term escrow. Escrow is considered as a legal concept that refers to an arrangement wherein a third party holds an asset or any financial instrument on behalf of the contracting parties in an escrow agreement, which are still under a pending transaction.
In this case, the third party that held the asset is referred to as the escrow agent. Overall, an escrow agreement ensures that the obligations an agreement aside from the escrow arrangement is complied with. It provides a full detail of the escrow arrangement.
Software Escrow Agreement
Business Impact Escrow
Common Forms of Escrow Agreements
The content and terms of an escrow agreement vary according to its type and purpose. Here are some common forms of escrow agreement and their corresponding features.
- Software Escrow Agreement Template – In this kind of agreement, the escrow agent holds the software systems source code. This is done in order to ensure continued used of the software and to mitigate risks. It is a simple way of protecting intellectual property. The key components of which are the:
- appointment of the escrow agent and payment section,
- materials deposited in escrow,
- terms as to the modifications of the materials,
- notice of release event, and
- termination clauses.
- Environmental Escrow Agreement Template – In terms of environmental transactions, escrows are also helpful. As you may observe in the given template, the components that you have to include in your agreement are the:
- initial deposit to the escrow fund,
- uses of the escrow funds,
- duties of the escrow agent, and
- other miscellaneous items.
In dealing with escrow agreements, take note that an escrow agent differs from a commission agent in a commission agreement. The latter has to accept and sell goods as an alter-ego of his or her principal.
Practical Ways to Make Your Escrow Agreement Effective
The key to a successful and reliable escrow agreement is applying the correct language and being familiar with the basic format and structure of an escrow contract. Like any other contract may it be for a marketing agreement template or a generalized one, techniques and strategies are needed to make them more comprehensible. Here are some practical ways that may help you.
- Do extensive research. In drafting contracts and agreements, research is also an important skill that you have to master. For those who have no legal background, research can help you get familiar with the dynamics of an escrow agreement. You can also come across templates to help you further. For legal practitioners, research can further enrich your knowledge and expertise.
- Check if you’ve provided complete and updated deposit contents. In depositing the object of your escrow arrangement, ensure provide clear monitoring mechanisms for updates.
- Adopt a consistent and established escrow policies. You must adopt a standardized and consistent policy so that the terms of the escrow will go on smoothly.
These are some points that you may consider in crafting an escrow agreement. Just take note that is an agreement that parties consent to enter into in order to reap more benefits and security for their company and its properties.