ESCALATOR CLAUSE Meaning and
Definition
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An escalator clause refers to a contractual provision that stipulates an incremental increase or adjustment in specific terms or conditions over a specified period. It is commonly used in business contracts, leases, labor agreements, and loan agreements. The purpose of an escalator clause is to account for and accommodate changes in economic conditions, such as inflation, market fluctuations, or rising costs.
In simpler terms, an escalator clause acts as a mechanism that automatically adjusts certain aspects of an agreement to reflect changes in the market or economy. For instance, in a lease agreement, an escalator clause may provide for an annual rent increase based on the percentage increase in the Consumer Price Index (CPI) or any other agreed-upon index. Similarly, in a labor agreement, an escalator clause may establish periodic wage increases tied to inflation rates or changes in the cost of living.
The inclusion of an escalator clause adds a level of flexibility and fairness to contracts by ensuring that both parties are protected from unforeseen economic changes. It helps to maintain the relevance and value of the terms agreed upon, avoiding the need to renegotiate the entire contract when economic conditions fluctuate.
In summary, an escalator clause is a contractual provision that allows for the automatic adjustment of specific terms or conditions based on changes in economic factors, providing stability and fairness to both parties involved in the agreement.
Common Misspellings for ESCALATOR CLAUSE
- wscalator clause
- sscalator clause
- dscalator clause
- rscalator clause
- 4scalator clause
- 3scalator clause
- eacalator clause
- ezcalator clause
- excalator clause
- edcalator clause
- eecalator clause
- ewcalator clause
- esxalator clause
- esvalator clause
- esfalator clause
- esdalator clause
- esczlator clause
- escslator clause
- escwlator clause
Etymology of ESCALATOR CLAUSE
The term "escalator clause" is a combination of two words: "escalator" and "clause".
The word "escalator" originates from the Latin word "scala", meaning "stair", combined with the suffix "-tor", indicating a doer or an object that does an action. In the late 19th century, the word "escalator" was coined and used to describe a moving staircase or a mechanical device that moves people between different levels or floors in a building.
The term "clause" comes from the Latin word "clausula", meaning "a closing, a clause", and is used to refer to a distinct part or provision within a legal document, contract, or agreement.
When combined, an "escalator clause" refers to a specific provision within a contract or agreement that allows for the automatic adjustment of certain terms, such as wages, prices, or rents, in response to specified circumstances or conditions.
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