ITPEC FE Morning April 2021 Question 72

An escrow service acts as a trusted intermediary that holds the buyer's payment until the transaction is confirmed complete. The sequence is:

1. (1) Seller ↔ Buyer — Agreement of sale
2. (2) Buyer → Escrow — Payment for purchase
3. (3) Escrow → Seller — Notice of payment deposit (a)
4. (4) Seller → Buyer — Shipment of product (c)
5. (5) Buyer → Escrow — Notice of product receipt (b) ✔
6. (6) Escrow → Seller — Transfer of payment (d)

Step (5) is the buyer confirming to the escrow company that the product has been received. Only after this confirmation does the escrow release funds to the seller.

Why not others:
- (a) Notice of payment deposit — this is step (3), where escrow notifies the seller that funds are secured
- (c) Shipment of product — this is step (4), where the seller sends the product to the buyer
- (d) Transfer of payment — this is step (6), where escrow finally pays the seller

Key rule: In escrow, money is released only after the buyer confirms receipt — step (5) is always "Notice of product receipt."

AI-generated — may contain errors