# Price Indexation Clause

Source: https://contracko.com/clause-library/price-indexation

# Price Indexation Clause

Adjusts contract prices over time against an objective index such as inflation, protecting margins in long deals.

## What it is

A price indexation (or escalation) clause links agreed prices to a published index, typically a consumer or producer price index, so they rise (or fall) at set intervals. It removes the need to renegotiate every year in multi-year contracts.

## Why it matters

In long-term supply or service contracts, fixed prices erode margins when input costs rise. Indexation keeps pricing fair to both sides and predictable, reducing the risk of disputes or unilateral price hikes.

## How to apply it

- Name a specific, published index (e.g. CBS CPI) and the exact reference month.
- State the adjustment frequency and a clear formula for calculating the new price.
- Decide whether indexation is automatic or requires written notice.
- Add a fallback if the chosen index is discontinued or replaced.

## Negotiation tips

- • Buyers can cap annual increases or split the index movement between the parties.
- • Sellers should ensure the clause permits upward, not just downward, adjustment.

## Common pitfalls

- • Referencing an index that is later renamed or discontinued with no fallback.
- • In consumer contracts, an opaque escalation clause may be unreasonably onerous.

### How Contracko helps

Contracko's AI review reads your multi-year contracts and surfaces indexation clauses, flagging any that lack a named index or a fallback. Because price-adjustment dates repeat across many contracts, Contracko tracks these as recurring milestones and sends reminders before each adjustment is due, so the right team can verify the calculation and update records in time.

## Legal references

- [BW 6:248 Reasonableness and fairness Dutch law](https://wetten.overheid.nl/BWBR0005289)
- [BW 6:233 Unreasonably onerous standard terms Dutch law](https://wetten.overheid.nl/BWBR0005289)

Unless marked otherwise, references are to Dutch law (Burgerlijk Wetboek, the Dutch Civil Code); EU instruments such as the GDPR apply across the EU. This is general information, not legal advice. Other jurisdictions treat these concepts differently. Verify the current text and your situation with a qualified lawyer.

## Relevant for

[Commercial Real Estate](https://contracko.com/industries/commercial-real-estate)[Logistics & Distribution](https://contracko.com/industries/logistics)[Manufacturing](https://contracko.com/industries/manufacturing)[Managed Service Providers](https://contracko.com/industries/managed-service-providers)[Property Management](https://contracko.com/industries/property-management)

## Related clauses

- [Payment Terms Clause](https://contracko.com/clause-library/payment-terms)
- [Renewal and Notice Period Clause](https://contracko.com/clause-library/renewal-and-notice)
- [Service Level Agreement (SLA)](https://contracko.com/clause-library/service-level-agreement)

## Related terms

- [Consideration](https://contracko.com/glossary/consideration)
- [Good faith](https://contracko.com/glossary/good-faith)
- [Term (duration)](https://contracko.com/glossary/term)

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## Frequently asked questions

Common questions about this clause.

- **Q:** Which index should we use for indexation in the Netherlands?
  **A:** A published CBS price index (consumer or producer) is common; always fix the specific series and reference month to avoid ambiguity.

- **Q:** Can prices go down under an indexation clause?
  **A:** Only if drafted symmetrically; many clauses allow upward adjustment only, so confirm the direction expressly.

- **Q:** Does indexation apply automatically or must a party invoke it?
  **A:** It depends on the drafting. The clause should state explicitly whether the adjustment occurs automatically or requires written notice from the party entitled to invoke it.

- **Q:** What happens if the agreed index is discontinued?
  **A:** Without a fallback the clause may be unworkable, creating a gap. Always include a replacement mechanism pointing to the successor index or an agreed alternative.

- **Q:** Is there a cap on how much prices can be raised per adjustment?
  **A:** Only if the clause sets one. Buyers often negotiate an annual cap or a corridor; without it, the adjustment follows the index movement in full.

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