What Is an Escalator Clause?
Also known as escalation clauses, escalator clauses are provisions within contracts that make it possible to adjust the price or salary named within the contract, if specified events that are beyond the control of the parties involved in the contract take place. The escalator clause helps to ensure that providers of goods and services do not encounter unreasonable financial hardship as the result of uncontrollable increases in the prices of the raw materials required to deliver goods to customers, or the increase of utilities or taxes. At its core, this type of contract clause is intended to ensure that the terms of the contract can still be honored, even if unforeseen and uncontrollable situations come to pass at some point during the life of the contract.
