In Panama, Deposit Contracts in Escrow, also known as Escrow Contracts, are a legal mechanism used in the business and financial field. In this article, we will explain what these contracts are, how they work, and their most common applications.
Deposit Contracts in Escrow are a financial instrument in which two or more parties agree to deposit an asset or property through an independent and trustworthy third party, with the aim of ensuring the fulfillment of the obligations agreed upon between them.
The word "escrow" originally referred to a sealed and closed envelope in which a document or event was kept that could not be disclosed or published until a specific occasion or date. For the purposes of this article, we will use both "plica" and "escrow" as synonyms.
Depositor: the party that delivers the asset or property into escrow.
Beneficiary: the party that has the right to receive that asset or property from escrow if the obligations agreed upon in the contract are fulfilled.
Escrow Agent: the trusted and independent third party that receives the asset or property in escrow and is responsible for keeping it secure until the conditions of the contract are met. It is important to note that the Escrow Agent does not have ownership rights over the deposited asset or property; they simply have custody of it until the agreed-upon conditions in the contract are fulfilled.
Types of assets that can be deposited in escrow
The assets that can be deposited in escrow can vary widely, ranging from common ones such as money to fulfill a contractual obligation, to items like stock certificates, software or source code, movable property, or intangible assets.
It is important to note that, unlike in a trust agreement, the ownership of the assets deposited with the escrow agent does not transfer to them. They simply maintain custody of the assets to be transferred within the specified timeframe, manner, and conditions established in the contract.
In summary, deposit contracts in escrow are a very useful legal instrument to protect the confidentiality of valuable documents and objects. If you need more information about this type of contract or require assistance in creating a deposit contract in escrow, do not hesitate to contact JVD Consultores, experts in corporate law in Panama.
