Use case - selling a physical item with delivery through escrow

Selling used items to a stranger is the scenario with the highest "price of trust". The seller fears shipping the item and not getting paid, the buyer fears paying and receiving a brick. Escrow removes both risks, but physical goods have their own subtleties: delivery time, inspection and evidence of condition. The general scheme is in the deal lifecycle.

The participants

• Maria - sells a camera, the seller.
• Thomas - the buyer from another country.
• The guarantor - a professional intermediary, rates 2% base and 10% in a dispute (how to choose).

The price is 650 USDC. The network is Base, because of its low fees (comparing networks).

Step 1. Preparing the terms

Maria writes the terms from the template for goods (principles):

Item: camera model X, serial number 12345, included: a 24-70 lens, charger, 2 batteries.
Condition: working, no dents on the body, no dust on the sensor; photos and video of operation (links, shooting date).
Delivery: by courier with a tracking number and insurance, paid by the seller, shipping within 2 days of the deal being accepted.
Inspection: the buyer must film an unedited unboxing video and within 3 days of receipt confirm receipt or open a dispute.
Defects: the following are material: a dead shutter button, fungus/scratches on the lens, a mismatched serial number.
Deal term: 30 days from acceptance.

Note the term: it must cover shipping + delivery + inspection. An international parcel may travel for two weeks, and 7 days would not be enough.

Step 2. The seller's offer

Maria creates the offer as the seller: 650 USDC, counterparty - Thomas, guarantor named, term 30 days. At this moment nobody deposits money. The offer lives 7 days waiting for Thomas.

Step 3. Acceptance and payment

Thomas reads the terms, checks the addresses and accepts the offer. At the moment of acceptance the money (650 USDC) goes into the contract and the 30-day term starts to run. Maria now sees that the payment is reserved and ships the camera.

Step 4. Shipping

Maria packs the camera, filming the process (serial number, contents, packaging), sends it by courier and posts the tracking number in the chat. All this is her evidence (what to collect).

Step 5. Receipt and inspection

Thomas receives the parcel and films the unboxing at once. He checks the serial number, the camera's operation, the condition of the lenses.

Option A: all is well

Thomas presses "Confirm receipt". The contract distributes 650 USDC:

Option B: a defect is found

In Thomas's video traces of fungus are visible on the lens that were not in the photos. He writes to Maria, who claims the fungus could have appeared in transit. They fail to agree and Thomas opens a dispute.

1. Thomas attaches the unboxing video, photos of the lens and the terms.
2. Maria attaches her photos and video from before shipping where the lens is clean, and the insured tracking number.
3. The guarantor studies the materials. Maria's video confirms a clean lens, but fungus does not appear in three days of transit, and in the pre-shipping video the lens was filmed from afar and the detail is not visible. The guarantor decides: the seller is probably at fault, but not one hundred percent. Ruling: 25% to the buyer, 75% to the seller.

The calculation (the guarantor's dispute rate is 10%):

Thomas keeps the camera and gets partial compensation, Maria gets the major part of the amount. Both shared the cost of arbitration.

Specifics of physical goods

• The term. Make sure the deal term includes delivery and inspection. If the term has run out and the deal is not closed, it can be closed with a refund to the buyer. If you are the seller and the parcel is on its way while the term is near, do not wait: open a dispute before the term ends (why).
• Insurance and tracking number. They protect against loss of the parcel and serve as evidence.
• Privacy. Do not post your address and phone in chats without need.
• Customs and taxes. Decide who pays and write it in the terms.
• Item swapping. Require serial numbers and an unboxing video.

What to read next

Look at digital goods: a domain and accounts. And if it is about freelance - a project paid by stages.