A provision in an agreement or regulation giving a party or beneficiary the benefit of an increase in payment, or an excuse from payment of an additional amount, where some specified change in financial conditions occurs, such as an increase in cost of living.
A clause in a contract providing for increases or decreases in wages, prices, etc. based on fluctuations in the cost of living, production costs, etc.
A paragraph in a contract that sets the terms for regular price increases. Escalator clauses may be found in labor contracts. Such a clause also may be part of a long-term supply contract, in which case the clause provides for regular price increases to the seller or allows the seller to pass along increased prices of raw materials or goods.