Escalator Clause

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Escalator Clause

A stipulation contained in a union contract stating that wages will be raised or lowered, based upon an external standard such as the cost of living index. A term, ordinarily in a contract or lease, that provides for an increase in the money to be paid under certain conditions.

Escalator clauses frequently appear in business contracts to raise prices if the individual providing a particular service or type of merchandise is forced to pay more for labor or materials.

Such clauses are also often part of contracts or leases executed subject to price-control regulations. When this type of provision is in a lease, a landlord has the power to collect the maximum amount of rent allowed under rent regulations that are in effect at the time of the lease. The escalator clause provides that if the rent regulations are altered during the time of the lease, the tenant must pay the new rental fee computed pursuant to the revised regulations.

escalator clause

n. a provision in a lease or other agreement in which rent, installment payments or alimony, for example, will increase from time to time when the cost of living index (or a similar gauge) goes up. Often there is a maximum amount of increase ("cap") and seldom is there a provision for reduction if the cost of living goes down or for deflation instead of inflation. (See: cap)

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In the French GAAP accounts, lease payments under operating leases are recognized as an expense on a straight-line basis over the lease term, with the straight-line amount adjusted for the effect of escalation clauses generally based on the construction cost index or inflation.
Errors and poor administration of the escalation clause can have serious and lasting negative impact for the property with both existing tenants and new prospects.
During a period of decreasing occupancy, the escalation clause fails to protect the owner from inflationary increases in operating expenses.
We don't have an escalation clause in that contract.
Accessibility of parking and the escalation clause in the lease were classified as very important by office tenants.
The accounting firm's new lease, which runs for three years without an escalation clause, calls for payment of $10.
KOC, KPC's upstream arm, has for the first time recently inserted a steel price escalation clause into a contract.
In this instance, the escalation clause included a section which stated that the "tenant will pay its pro rata share of capital costs expended for energy-saving devices.
Many leases do not contain an escalation clause for such overhead costs, and that can have an impact on the property's profitability.
Changes that Fitchburg requested include: a five-year contract eliminating the option years, removal of the fuel escalation clause, and installation of cameras on all of the buses.
7) Firm proposals are desired and no proposal containing an escalation clause will be considered.
Escalation clause is not applicable for this tender.