Controlled Disbursement

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Part I. Disbursement Authorization Framework

I.1 Definitions

• "Authorization" means the instruction issued by You (or automatically by the Platform based on pre-defined criteria agreed by You) to the Partner Bank to release Funds from the Controlled Hold to a Provider upon verification of Milestone completion.
• "Funds" means the monetary amounts allocated by You in Your Partner Bank account for Project execution, which remain Your legal property at all times until Disbursement to Providers.
• "Partner Bank" means a licensed banking institution in Ghana or another jurisdiction with which Nnarksup has a Disbursement Control Agreement in place to facilitate the Controlled Hold and release mechanism.
• "Milestone" means a distinct, measurable, and verifiable phase or deliverable within a Project, against which payment to a Provider is conditional.
• "Controlled Hold" means the temporary restriction placed by the Partner Bank on Funds within Your bank account, preventing withdrawal or transfer except through the Disbursement Authorization Framework.
• "Disbursement" means the release of Funds by the Partner Bank to a Provider following Authorization.
• "Project" means the construction, business setup, service provision, or other undertaking defined by You and structured into Milestones for execution by Providers.
• "Services" means the project governance, structuring, verification, coordination, and disbursement authorization services provided by Nnarksup as described in Article 3.
• "Verification" means the process of confirming Milestone completion through AI-assisted analysis, field officer inspection, Documentation review, or other methods specified in the Project Agreement.
• "Verification Officer" means an individual engaged by Nnarksup to conduct physical inspections, quality assessments, and Documentation gathering for Projects.
• "Provider" means a contractor, service provider, supplier, or other party engaged to execute work under a Project, who has entered into a Provider Agreement with Nnarksup.

I.2 Roles & Responsibilities

• Client Role: Fund allocation, auto-approval or manual approval authority upon disputes
• Partner Bank Role: Custody, hold placement, payment execution
• Nnarksup Role: Verification, final auto-approval authorization issuance, audit trail
• Provider Role: Work execution, Documentation submission

I.3 Controlled Hold Mechanism

• Legal nature of hold (contractual restriction, not seizure)
• Client retains ownership at all times
• Hold amount calculation (Project budget + fees)
• Hold placement process
• Hold modification (for change orders)
• Hold release (partial per Milestone, full upon Project completion)

I.4 Authorization Conditions

• Trigger Events: Verified Milestone completion
• Required Evidence: AI verification + field inspection + Documentation
• Approval Workflow:
  • Auto-approval (default)
  • Manual approval if client raises an issue(Client reviews within 3 days)
  • Deemed approval (if Client silent beyond 5 days of raising an issue)

I.5 Authorization Issuance

• Nnarksup issues signed, encrypted Auto-approval Authorization to Bank
• Authorization includes:
  • Project ID, Milestone ID
  • Payment amount
  • Provider bank account details
  • Verification evidence reference
  • Client approval confirmation
  • Bank validates Authorization authenticity
  • Bank executes payment within 3 Business Days

I.6 Payment Execution by Bank

• Bank's obligation to execute upon valid Authorization
• Payment routing: Client account → Provider account
• Nnarksup commission deduction (separate payment flow)
• Transaction confirmation to all parties
• Bank's liability limitations

I.7 Rejection & Dispute Handling

• Client rejection process (with reasons)
• Provider correction opportunity
• Disputed Authorization (payment held pending resolution)
• Arbitration outcome enforcement

I.8 Audit Trail & Compliance

• Immutable log of all Authorizations
• Regulatory reporting (AML/CFT compliance)
• Tax documentation
• Data retention (10 years)

I.9 System Failure Protocols

• Manual backup Authorization process
• Bank system downtime procedures
• Nnarksup platform outage contingencies
• Force Majeure impact on Authorizations

I.10 Liability Allocation

• Bank liable for: Unauthorized payments, execution errors
• Nnarksup liable for: Wrongful Authorization issuance (gross negligence only)
• Client liable for: Unreasonable rejection
• Provider liable for: Fraudulent Documentation

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Part II. Controlled Disbursement Structure & Non-custodial Agreement

II.1 Fundamental Principle

• NON-CUSTODIAL STRUCTURE: Nnarksup does NOT hold, custody, or control Funds
• All Funds remain in Client's bank account or Partner Bank's custody
• Nnarksup = technology layer providing governance, NOT financial custody

II.2 Legal Characterization

• Nnarksup is NOT an escrow agent under traditional escrow law
• Nnarksup is a project governance platform
• Partner Bank acts as quasi-escrow holder (under banking relationship with Client)
• Controlled Hold = contractual arrangement, not statutory escrow

II.3 Fund Ownership

• Client retains legal and beneficial ownership at all times
• Funds never transferred to Nnarksup
• Controlled Hold = restriction on Client's portion of project funds in own account (Client still owns)
• Upon Disbursement, ownership transfers directly from Client to Provider

II.4 Partner Bank's Custodial Role

• Bank holds Funds as Client's bank (not as escrow agent for Nnarksup)
• Bank's obligations governed by banking agreement with Client
• Nnarksup has NO access to Client's funds
• Nnarksup only issues instructions; Bank executes or declines

II.5 Risk Allocation - Fund Loss

If funds lost due to:

• Bank insolvency → Client bears risk (deposit insurance applies per banking law)
• Nnarksup wrongful Authorization → Nnarksup liable (limited to actual loss caused)
• Provider fraud → Provider liable; Nnarksup NOT liable (except gross negligence in verification)
• Cyber-attack on Bank → Bank liable (per banking regulations)
• Cyber-attack on Nnarksup Platform (no fund access) → Nnarksup NOT liable for Client's funds

II.6 Nnarksup's Limitations

Nnarksup does NOT:

• Guarantee fund safety (Bank's role)
• Insure funds (Client should ensure Bank is insured)
• Accept fiduciary duty over funds
• Act as trustee or escrow agent
• Nnarksup DOES:
  • Provide technology infrastructure for control
  • Verify Milestone completion
  • Issue Auto-approval Authorizations based on verification
  • Maintain audit trail

II.7 Regulatory Compliance

• Structure designed to avoid classification as deposit-taking institution
• Complies with Bank of Ghana fintech guidelines
• Nnarksup does NOT require banking/escrow license under this model
• Future Model Evolution path (deeper bank integration)

II.8 Client Acknowledgments

Client acknowledges and accepts:

• Funds held by Bank, not Nnarksup
• Banking relationship governed by separate agreement
• Nnarksup not liable for Bank's acts/omissions
• Controlled Hold is Client's voluntary election
• Risk of Bank failure (mitigated by deposit insurance)

II.9 Termination of Hold

Hold released upon:

• All Milestones completed and paid
• Project cancellation (by mutual agreement)
• Client revocation (if Project not commenced)
• Unused funds return to Client's unrestricted account

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Part III. Liability, Indemnification & Risk Allocation Framework

III.1 Nnarksup's Liability Limitations

III.1.1 Maximum Liability Cap

• Total liability to Client: Lesser of (a) Fees paid by Client in 12 months, OR (b) GH₵[50,000]
• Total liability to Provider: Lesser of (a) Commission withheld, OR (b) GH₵[25,000]

III.1.2 Excluded Damages

• NO liability for indirect, consequential, punitive, or special damages
• NO liability for loss of profits, revenue, data, or business opportunities

III.1.3 Causes for Which Nnarksup is NOT Liable

• Provider performance, fraud, or negligence
• Client's unreasonable rejection of verified Milestones
• Partner Bank errors, delays, or insolvency
• Force Majeure events
• Third-party service failures (internet, power, etc.)
• Verification limitations (cannot detect all defects)
• User error or misuse of Platform

III.1.4 Gross Negligence Exception

• Liability limitations do NOT apply if loss caused by Nnarksup's gross negligence or willful misconduct
• "Gross negligence" = extreme departure from standard of care (not mere negligence)

III.2 Client Indemnification Obligations

III.2.1 Client Indemnifies Nnarksup For

• Breach of User Agreement
• Violation of Applicable Law
• Claims by Providers arising from Client's breach of Project Agreement
• Infringement of third-party IP rights by Client's designs/plans
• Tax liability arising from Client's non-compliance

III.2.2 Indemnification Process

• Nnarksup notifies Client of claim
• Client assumes defense (or Nnarksup defends at Client's expense)
• Client pays settlements, judgments, and Nnarksup's legal costs

III.3 Provider Indemnification Obligations

III.3.1 Provider Indemnifies Nnarksup For

• Work quality defects or non-compliance
• Injury/property damage caused by Provider
• Claims by Clients arising from Provider's breach
• Fraudulent Documentation
• Violation of safety or building codes
• IP infringement by Provider's methods/designs
• Environmental damage

III.4 Risk Allocation Matrix

III.5 Insurance Requirements

III.5.1 Nnarksup's Insurance

Nnarksup does not currently hold professional indemnity or supervision insurance. This section will state the cover and its limits once it is in place.

III.5.2 Provider's Insurance

• Per Provider Agreement Article 9.3

III.5.3 Client's Insurance (Recommended, Not Required)

• Property insurance for Projects
• Builder's risk insurance (for construction Projects)

III.6 Disclaimer of Warranties

Nnarksup provides Services "AS IS" without warranties:

• NO warranty of uninterrupted service
• NO warranty of error-free verification
• NO warranty of Project completion
• NO warranty of Provider suitability
• NO warranty of fitness for particular purpose
• Exception: Nnarksup warrants it will perform Services with reasonable skill and care (professional standard).

III.7 Third-Party Claims

III.7.1 Claims by Providers Against Clients

• Nnarksup NOT a party; disputes between Provider and Client
• Nnarksup may provide evidence (Verification reports)

III.7.2 Claims by Third Parties (Neighbors, Subcontractors, etc.)

• Directed at Provider (work site issues)
• Provider indemnifies Nnarksup and Client

III.8 Dispute Resolution Costs

III.8.1 Costs in Client-Provider Disputes

• Arbitration costs split per arbitrator's award
• Each party bears own legal fees (unless arbitrator awards fees to prevailing party)
• Nnarksup's mediation services

III.8.2 Costs in Client/Provider vs. Nnarksup Disputes

• If Nnarksup prevails: Client/Provider pays Nnarksup's legal costs
• If Client/Provider prevails: Each bears own costs (unless gross negligence by Nnarksup, then Nnarksup pays)

III.9 Survival of Obligations

Indemnification and liability provisions survive:

• Agreement termination
• Project completion
• Account closure
• Survival Duration: [7] years from date of event giving rise to liability (aligns with statute of limitations).