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14. What are the benefits of using Escrow compared to Letters of Credit?
Escrow can be arranged faster, Escrow is cheaper, Escrow is more efficient. Buyer and seller agree the conditions for the release of the money in escrow, it is the responsibility of the escrow agent to make sure that the release conditions can be executed. There is no involvement of other banks. The buyer orders his money to be transferred to the escrow account and upon the release condition met, the money in escrow is released and electronically transferred to the supplier. The buyer and seller can change the release conditions during the transaction by sending in a joint instruction to the escrow agent. If such joint instruction is accepted by the escrow agent the changes are made. Such changes can be the delivery date, place of delivery, amounts to be prepaid etc.
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