Escalation Clause

An escalation clause is a provision in a service agreement that allows for adjustments to pricing or terms based on specific conditions, such as inflation, changes in market rates, or cost increases for materials. This clause helps protect both parties from unforeseen economic changes that could impact the viability of the agreement. Regular review and application of the escalation clause ensure that the contract remains fair and sustainable over time. Clear documentation and communication about the conditions that trigger the clause are essential for transparency and mutual understanding.