Escalator Clause


Escalator Clause
A contract provision allowing for one to pass an increase in costs to another party. Escalator clauses are usually related to influences beyond both parties control, such as inflation.

Also known as an "escalation clause".

Escalation clauses allow people to enter large or long-term contracts, while accounting for changes in the market or economy. For example, let's examine a possible arrangement for someone to rent an apartment. If housing prices are increasing rapidly, a landlord may be hesitant to sign a longer term rental agreement or lease, since he or she could lose out on the property's appreciation. By including an escalator clause, where rent can increase by a specified amount each period, the landlord can still benefit from current market conditions, while the renter can secure a long-term living arrangement.


Investment dictionary. . 2012.

Look at other dictionaries:

  • escalator clause — es·ca·la·tor clause / es kə ˌlā tər / n 1: a clause in a contract that provides for an increase in the amount of the payments made under the contract to reflect an increase in costs or the raising of a government imposed cap on costs 2: a clause… …   Law dictionary

  • escalator clause — ☆ escalator clause n. a clause in a contract providing for increases or decreases in wages, prices, etc. based on fluctuations in the cost of living, production costs, etc …   English World dictionary

  • escalator clause — Provision in a contract allowing cost increases to be passed on. In an employment contract, for example an escalator clause may call for wage increases in line with inflation. Bloomberg Financial Dictionary * * * escalator clause escalator clause …   Financial and business terms

  • Escalator clause — An escalator clause is a clause in a lease or contract that guarantees a change in the agreement price once a particular factor beyond control of either party affecting the value has been determined.Escalator clauses are quite common in… …   Wikipedia

  • escalator clause — In union contract, a provision that wages will rise or fall depending on some standard like the cost of living index. In lease, provision that rent may be increased to reflect increase in real estate taxes, operating costs, and even increases in… …   Black's law dictionary

  • escalator clause — In union contract, a provision that wages will rise or fall depending on some standard like the cost of living index. In lease, provision that rent may be increased to reflect increase in real estate taxes, operating costs, and even increases in… …   Black's law dictionary

  • escalator clause — noun a clause in a contract that provides for an increase or a decrease in wages or prices or benefits etc. depending on certain conditions (as a change in the cost of living index) • Syn: ↑escalator • Hypernyms: ↑article, ↑clause …   Useful english dictionary

  • escalator clause — (also escalation clause) noun a clause in a contract that allows for a rise in wages or prices under certain conditions …   English new terms dictionary

  • escalator clause — a provision in a contract calling for adjustments, usually increases, in charges, wages, or other payments, based on fluctuations in production costs, the cost of living, or other variables. Also called, esp. Brit., escalation clause. [1925 30,… …   Universalium

  • escalator clause — es′calator clause n. bus a provision in a contract calling for adjustments, usu. increases, in charges, wages, or other payments, based on fluctuations in production costs, the cost of living, or other variables …   From formal English to slang


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