A couple people here had a misunderstanding.
Assuming that any of the parties do not agree on anything , everything is frozen.
The money gets deposited in the shared wallet after both parties have provided collateral.
If they have a dispute , such as 1000$ is not received , both parties have their collateral stuck along with the 1 BTC stuck in the shared wallet.
Surely , the bitcoin seller has a bigger loss in this case , but the buyer has a loss too.
Thanks for helping to explain it!
Now what I don't get is how will funds from both parties be simultaneously be introduced into the wallet ?
( not too much knowledge about technicalities )
We create an atomic transaction where both funds are locked at exactly the same time when it gets published. It is all or nothing.
1. Bob creates first a tx with 2 inputs and the multiSig output.
2. He sign his input (He agree to pay his part, but the tx is only valid if the other party also agree to pay)
3. He send the tx to Alice the partly signed and therefore invalid tx (off-chain)
4. Alice sign her input. The tx is now valid but still not published, so both inputs could be still spent to another address if any of both want to cancel.
5. Alice publish the tx. From that point on both funds are locked.