# Price indexation clause

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

# 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.

### How Contracko helps

Contracko extracts indexation clauses, the referenced index and adjustment dates from uploaded contracts, and sends reminders ahead of each annual adjustment window. For large real estate or supply portfolios this prevents missed adjustments and gives finance teams the data needed to calculate and apply the correct new price.

## Legal references

- [BW 6:248 Reasonableness and fairness 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)[Property Management](https://contracko.com/industries/property-management)[Logistics & Distribution](https://contracko.com/industries/logistics)

## Related clauses

- [Price Indexation Clause](https://contracko.com/clause-library/price-indexation)
- [Payment Terms Clause](https://contracko.com/clause-library/payment-terms)

## Related terms

- [Consumer Price Index (CPI)](https://contracko.com/glossary/consumer-price-index)
- [Price revision](https://contracko.com/glossary/price-revision)
- [Price escalation](https://contracko.com/glossary/price-escalation)
- [Contract value](https://contracko.com/glossary/contract-value)

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## Frequently asked questions

Common questions about this term.

- **Q:** What happens if the named index is discontinued?
  **A:** The contract should specify a fallback: use of the nearest equivalent index, agreement between the parties, or an expert determination. Without a fallback the clause may become unworkable and could be a ground for renegotiation under changed circumstances.

- **Q:** Can a landlord apply indexation retroactively if they missed a year?
  **A:** Whether a missed indexation can be claimed retrospectively depends on the contract wording and whether the clause provides for accumulation or lapse of unclaimed adjustments. Dutch courts have taken different positions; the contract should be explicit to avoid this uncertainty.

- **Q:** Does a price indexation clause need to be signed separately?
  **A:** No, it is part of the main contract and does not require separate signing. It should, however, be clearly set out and not buried in a schedule, to ensure both parties are aware of its existence and terms.

- **Q:** Can the parties agree to skip an indexation year?
  **A:** Yes, by mutual written agreement. Skipping a year does not automatically waive future rights unless the agreement says so. The base price for the next adjustment should be agreed in writing to avoid a dispute about whether the skipped adjustment is included in the next base.

- **Q:** Is the CPI indexation clause enforceable even when inflation is unusually high?
  **A:** Generally yes. A clearly agreed indexation clause is binding even if it produces a large increase. A party may argue changed circumstances under BW 6:258 only in extreme and genuinely unforeseeable situations; the mere fact that inflation is high is unlikely to meet that threshold.

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