escalation clause

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A clause in a contract authorizing the contractor to increase the price in specified conditions of all or part of the services or goods he has contracted to supply. Escalation clauses are common in contracts involving work over a long period in times of high inflation. The escalation may refer to either or both labour and materials and may or may not state the way in which the price is permitted to escalate. An escalation clause does not convert a contract into a cost-plus contract, but it represents a move in that direction.

Subjects: Business and Management.

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