When entering into a trading transaction with unknown counterparties,
you seek protection against either non-payment or non-performance
by the seller. Therefore, the transaction could be operated via an
escrow arrangement.
Acting as a independent third party, Chelton Capital Limited provides
both parties a safer trading environment by guarantying that the
buyer has the opportunity to inspect/accept the goods before instructing
for payment and the seller are assured that if the goods are in accordance
with the terms of the sales agreement, the payment will be made in
a timely efficient way.
The transactions between the same buyer and seller can be covered
by a sole escrow agreement.
Example
A Chinese cosmetic manufacturer wants to sell make up pencils
to a US company. The US buyer pays in advance into escrow. The
seller delivers the bill of lading to Chelton which upon receipt
releases the transaction amount in escrow to the seller and the
bill of lading to the buyer. It is understood that it has been
previously agreed in the escrow agreement that if the delivery
is not within a certain timeframe, funds in escrow will be returned
to the buyer.
A triangular alternative would be the following: An English
trader buys cement from a Turkish supplier and sells to a Congolese
buyer. The Congolese buyer is prepared to pay in advance into
a trusted third party account. The prepayment of USD 4,000,000
is to be released to the Turkish supplier and the English trader
simultaneously. This way, the identity of the supplier will remain
confidential to the Congolese buyer. The escrow agent releases
the amount in escrow when the Congolese buyer signs the escrow
release form after acceptance of the cement.
Using an Escrow
arrangement in this case is far more secure, more time and cost
efficient than a letter of Credit.
