Contractual Intermediary

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Contractual Intermediary

Holder of an indirect claim through a legal agreement that specifies that the individual must make periodic, fixed payments to the intermediary in exchange for the right to receive payments from the intermediary in the future.

Contractual Intermediary

A financial institution that stands between counterparties in a transaction. For example, in the sale of a house, a bank usually serves as a contractual intermediary by providing a mortgage to the homebuyer. In some non-traditional transactions, a bank may buy a product (e.g. corn) and immediately re-sell it for a profit to a third party. Most transactions requiring a loan to one of the parties, including intermediaries. See also: Murabaha.