The Law Dictionary

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ESCALATION CLAUSE Definition & Legal Meaning

Definition & Citations:

1. In Construction, this is an allowance to change the contracted price for labor, material, etc., based on a change in market prices or a consumer price index (CPI) as a benchmark. Provision in a contract. 2. In Leasing, this allows raising rent if maintenance and operation cost rise. Provision in property lease agreements. 3. In Lending this allows the raising of interest rate if a market ceiling for interest rates is met, or if another event, like the fall in the borrower credit rating, happens. Known also as escalator clause. Provision in loan agreements.


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