An escrow agreement is a contract that outlines the terms and conditions between parties involved, and the responsibility of each party. Escrow agreements generally involve an independent third party, called an escrow agent who holds a valuable asset until the specified conditions of the contract are met.

In the software industry, the objective for a vendor is to provide a third party (customer, partner, etc.) the possibility to access part of your IP (software, databases, documents, etc.), according to the contract set by the escrow agent in case of supplier’s failure. This kind of agreement has 2 benefits.

• For the supplier, it gives the ability to secure a deal with a reluctant client by guaranteeing the continuity of software utilization despite a potential failure (bankruptcy or acquisition by another company).
• For the customer, it provides a guarantee of continuity and further utilization of the software in case of supplier’s failure.