Price indexation clause
A clause that automatically adjusts the contract price to a published index such as the CPI.
Definition
A price indexation clause links periodic price adjustments to a named published index, most often the Consumer Price Index, so that the price tracks inflation without renegotiation. The clause should specify the exact index series, the reference period, the adjustment frequency and the formula. Ambiguity over which index figure applies is a frequent source of contract disputes, especially in leases and long-term supply.
Example
The lease indexation clause adjusts rent each year by the percentage change in the CBS CPI for all households.
Why this is a business risk
A price indexation clause that does not specify the exact index series, reference month or formula creates a recurring annual dispute. In years of high inflation, the financial stakes are significant: a 1% difference in the index applied to a multi-million-euro lease portfolio is material. Missed adjustment dates also create a risk of under-recovery that cannot always be claimed retrospectively.
How to manage it
- Name the index series, publisher, reference month and year of first adjustment explicitly in the clause.
- Set out the formula: new price = current price x (new index / base index). Avoid ambiguous formulations like "in line with inflation".
- Include a cap and floor if appropriate, and specify whether an unclaimed adjustment accumulates or lapses for the missed period.
- Diarise adjustment dates with advance reminders so the new price is calculated, communicated and invoiced on time.
- Review the clause at each renewal to ensure the named index is still published in the same form and update the reference if the index has been revised or discontinued.
Legal references
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.
Frequently asked questions
Common questions about this term.