A portion of the price is held by an escrow agent for a defined period, typically matching the general survival period, and released as claims are resolved. It provides a funded source for indemnification.
Escrow is frequently the exclusive remedy.
Alternative Names:
Indemnity Escrow|Holdback
Why it Matters?
Whether escrow is the exclusive remedy or merely a security determines the seller's actual exposure, since an exclusive escrow caps recovery at the held amount regardless of the stated indemnification cap. Buyers negotiating a cap above the escrow without recourse beyond it have secured a number without a source. Release mechanics and dispute procedures also matter, since a disputed claim can tie up the entire escrow past the release date.
Frequently Confused with
Related terms
Frequently asked questions
Is escrow the exclusive remedy?
What complicates release?





