When entering into a business contract, it is important to consider the potential for price increases over time. A price escalation clause can protect both parties by outlining how and when prices will be adjusted throughout the course of the agreement.

Here`s an example of a contract price escalation clause:

“Prices in this agreement are subject to adjustment in the event of increased costs of materials, labor, or other expenses related to the provision of the services or goods outlined in this agreement. Such adjustments will be based on actual cost increases and will be proportional to the extent of the increase. Notification of any price adjustment will be provided in writing, no later than 30 days prior to the effective date of the adjustment.”

This clause outlines that prices may be adjusted based on actual cost increases for materials, labor, or other expenses related to the agreement. It also provides a timeframe for notification of any adjustments, giving both parties time to make necessary adjustments to their budgets.

It is important to note that a price escalation clause should be specific to the type of agreement and industry in which it is being used. It should also be fair to both parties, ensuring that the price increases are reasonable and necessary based on actual cost increases.

In summary, a price escalation clause is an important aspect of any business contract. By outlining how and when prices may be adjusted, both parties can protect themselves and ensure a fair and transparent agreement.