Escalation clause

Escalation clause,

Definition of Escalation clause:

  1. 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 borrowers credit rating). Also called escalator clause.

  2. 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).

  3. Leasing: Provision in property lease agreements that allows a landlord to raise rent if the cost of maintaining or operating the building goes up.

Meaning of Escalation clause & Escalation clause Definition