From ca0b8c8b1d8e797d8f2e97f071131737b4a83ed9 Mon Sep 17 00:00:00 2001
From: Devadakene <ai@example.com>
Date: Tue, 18 Aug 2026 07:02:26 +0100
Subject: [PATCH] fix(escrow): implement InsufficientBalance and remove
 NotExpired

- Wired InsufficientBalance into release and refund as a defensive check against the contract's actual token balance, making the solvency invariant enforced at runtime.

- Removed NotExpired as it was confirmed to be unused scaffolding.

- Added tests to verify InsufficientBalance check.
---
 contracts/escrow/src/error.rs |  2 +-
 contracts/escrow/src/lib.rs   |  9 +++++++
 contracts/escrow/src/test.rs  | 44 +++++++++++++++++++++++++++++++++++
 3 files changed, 54 insertions(+), 1 deletion(-)

diff --git a/contracts/escrow/src/error.rs b/contracts/escrow/src/error.rs
index 581ad25..5e33550 100644
--- a/contracts/escrow/src/error.rs
+++ b/contracts/escrow/src/error.rs
@@ -13,7 +13,7 @@ pub enum Error {
     AlreadyRefunded = 7,
     InvalidSplit = 8,
     InvalidAmount = 9,
-    NotExpired = 10,
+    // NotExpired = 10, removed in ABI-breaking cleanup as it was unused scaffolding
     InsufficientBalance = 11,
     InvalidFee = 12,
     InvalidDeadline = 13,
diff --git a/contracts/escrow/src/lib.rs b/contracts/escrow/src/lib.rs
index 56af404..e3519b4 100644
--- a/contracts/escrow/src/lib.rs
+++ b/contracts/escrow/src/lib.rs
@@ -208,6 +208,10 @@ impl EscrowContract {
         let token_client = token::Client::new(&env, &escrow.token);
         let contract_address = env.current_contract_address();
 
+        if token_client.balance(&contract_address) < escrow.amount {
+            return Err(Error::InsufficientBalance);
+        }
+
         if payouts.fee > 0 {
             token_client.transfer(&contract_address, &treasury, &payouts.fee);
         }
@@ -255,6 +259,11 @@ impl EscrowContract {
 
         let token_client = token::Client::new(&env, &escrow.token);
         let contract_address = env.current_contract_address();
+
+        if token_client.balance(&contract_address) < escrow.amount {
+            return Err(Error::InsufficientBalance);
+        }
+
         for i in 0..escrow.contributor_count {
             let contribution_key = DataKey::Contribution(issue_id, i);
             let contribution: Contribution =
diff --git a/contracts/escrow/src/test.rs b/contracts/escrow/src/test.rs
index ea57571..fefd292 100644
--- a/contracts/escrow/src/test.rs
+++ b/contracts/escrow/src/test.rs
@@ -881,3 +881,47 @@ fn test_release_loses_race_to_refund_at_grace_period_boundary() {
     // The would-be recipient gets nothing.
     assert_eq!(token_client.balance(&contributor), 0);
 }
+
+#[test]
+fn test_release_rejects_if_contract_balance_insufficient() {
+    let env = Env::default();
+    env.mock_all_auths();
+    let (_, _admin, _treasury, client) = setup(&env);
+
+    let token_admin = Address::generate(&env);
+    let (token_addr, asset_client, token_client) = create_token(&env, &token_admin);
+    let sponsor = Address::generate(&env);
+    asset_client.mint(&sponsor, &10_000_000_000i128);
+
+    client.fund(&202u64, &sponsor, &token_addr, &10_000_000_000i128, &200u64);
+
+    // Drain the contract's balance manually to trigger the defensive check
+    // However, the test environment allows us to use `env.mock_all_auths()`.
+    token_client.transfer(&client.address, &sponsor, &5_000_000_000i128);
+
+    let contributor = Address::generate(&env);
+    let recipients = vec![&env, (contributor.clone(), 10_000u32)];
+    let err = client.try_release(&202u64, &recipients);
+    assert_eq!(err, Err(Ok(Error::InsufficientBalance)));
+}
+
+#[test]
+fn test_refund_rejects_if_contract_balance_insufficient() {
+    let env = Env::default();
+    env.mock_all_auths();
+    let (_, _admin, _treasury, client) = setup(&env);
+
+    let token_admin = Address::generate(&env);
+    let (token_addr, asset_client, token_client) = create_token(&env, &token_admin);
+    let sponsor = Address::generate(&env);
+    asset_client.mint(&sponsor, &10_000_000_000i128);
+
+    client.fund(&203u64, &sponsor, &token_addr, &10_000_000_000i128, &200u64);
+
+    // Drain the contract's balance manually to trigger the defensive check
+    token_client.transfer(&client.address, &sponsor, &5_000_000_000i128);
+
+    env.ledger().set_timestamp(300);
+    let err = client.try_refund(&203u64);
+    assert_eq!(err, Err(Ok(Error::InsufficientBalance)));
+}