escalation clause

  

Definitions (3)

1.Construction: Provision in a contract for increasing or decreasing the contracted price for labor, material, etc., in step with the market prices or an agreed upon benchmark such as consumer price index (CPI).
2.Leasing: Provision in property lease agreements that allows a landlord to raise rent if the cost of maintaining or operating the building goes up.
3.Lending: Provision in loan agreements that permits a lender to raise interest rate if the market interest rates go over a certain ceiling, or if some contingency occurs (such as a fall in the borrower's credit rating). Also called escalator clause.

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