Cost Escalation
/ˈkɒst ˌɛskəˈleɪʃən/
Definitions
- (n.) An increase in the originally agreed contract price due to factors such as inflation, changes in law, or unforeseen costs.
The contract included a clause to account for cost escalation in construction materials.
- (n.) A contractual mechanism allowing adjustment of prices or fees over time to reflect increased costs.
Cost escalation clauses protect contractors against inflationary losses during long-term projects.
Forms
- cost escalation
Related terms
See also
Commentary
Cost escalation clauses should be clearly drafted to specify triggers and methods of calculation to avoid disputes.
This glossary is for general informational and educational purposes only. Definitions are jurisdiction-agnostic but reflect terminology and concepts primarily drawn from English and American legal traditions. Nothing herein constitutes legal advice or creates a lawyer-client relationship. Users should consult qualified counsel for advice on specific matters or jurisdictions.