Reviewing a price adjustment or indexation clause

A price adjustment clause decides whether a fixed price stays fixed: it links the price to an index, passes through cost changes, adjusts for currency movements or lets the supplier revise the price on notice. Each version moves risk between the parties, and each is drafted in formulae and references whose result needs to be checked before the contract is signed. I review the clause from whichever side instructs me and return it marked up with a written explanation of how the price will move, what the clause allows and what it does not, and the changes the other side will accept, for a fixed fee of £495 in three working days.

Who this is for

Suppliers wanting to protect their margin against cost inflation and customers wanting price certainty, in supply, services, maintenance, software, facilities management, logistics and long-term contracts in England and Wales. Between businesses the clause is a matter of agreement; where the customer is a consumer, a unilateral right to vary the price is subject to the fairness rules.

What to look for in a price adjustment or indexation clause

The index, the formula and the number it produces

An indexation clause should name the index (a consumer price index, a producer price index, a wage index, a sector index), the publisher, the series, the base month, the review date and the formula, and should say what happens if the index is rebased, discontinued or published late. The review runs the formula on the current figures to show what the clause produces, checks that the index matches the supplier's cost base rather than a general measure, and asks for a stated fallback index.

Base date, timing and the first adjustment

The base date decides how much inflation the first adjustment captures, and a base date months before the contract starts means the first increase arrives with the first invoice. The review checks the base date, the frequency of adjustment, whether adjustments apply to services already ordered, whether they can be backdated, and the notice the supplier must give. For a customer it asks for the base date to be the contract date and the first adjustment to be no earlier than the first anniversary.

Caps, floors and the customer's right to leave

A cap limits the annual increase and a floor prevents a decrease, and the review checks whether the clause has either, whether the cap is a percentage or a fixed sum, and whether an increase above the cap gives the customer a right to terminate. It asks for a right to terminate without penalty on notice where the supplier proposes an increase above the cap or a change to the pricing basis, and for a decrease where the index falls.

Cost pass-through, currency and the supplier's own costs

Pass-through clauses let the supplier recover increases in specific costs, fuel, energy, raw materials, wages, taxes and duties, and exchange rate movements, and the review checks that the costs are defined, that increases are evidenced, that the supplier's own inefficiency is not passed through, and that decreases are passed back. Where the customer is a business dealing on the supplier's standard terms, a clause that lets the supplier vary the price at will is a term that may allow it to render a performance substantially different from what was expected, which section 3 of the Unfair Contract Terms Act 1977 subjects to the reasonableness test.

Consumers: unilateral price variation and the fairness test

Where the customer is a consumer, a term that lets the trader increase the price without giving the consumer the right to cancel, or that allows the price to be determined or increased after the consumer is bound, is on the grey list in Schedule 2 to the Consumer Rights Act 2015 and may be unfair under section 62, and a price term is exempt from the fairness assessment under section 64 only if it is transparent and prominent. The review drafts an indexation clause for consumers that states the index and the formula, gives notice, and offers a right to cancel.

Disputes over the adjusted price and payment of the undisputed part

When an adjustment is disputed, the clause should say what the customer pays in the meantime and how the dispute is resolved: an expert determination on the arithmetic, a right to audit the supplier's evidence for a pass-through, and payment of the undisputed part on the normal terms, with interest under the Late Payment of Commercial Debts (Interest) Act 1998 on the balance once agreed. The review adds the procedure where it is missing and checks that a disputed adjustment does not give the supplier a right to suspend supply.

What it costs

Standard review, £495. Marked-up document and a written explanation of the changes. Three working days.

Buying online forms the engagement on payment. The scope is what the contract review page describes, you accept the Terms of Service at checkout, and I email you within four working hours to get started. If you would rather ask something first, email me.

What you get

• Your own contract returned with my amendments as tracked changes, plus a clean version with every change accepted, ready to send to the other side
• Comments in the document where a point needs explaining
• A written explanation of what I have changed and why, by email or as an attachment if it is lengthy, marking the points I would hold firm on and the ones that are negotiable
• A view on what is normal market practice and what is the other side pushing their luck
• One round of follow-up questions by email, included

What is not included

• Negotiating directly with the other side, which I quote separately once I know who is on the other side. Where the other side is willing to share a live document, I can work in that document directly
• Drafting a replacement contract from scratch
• Advice on the law of any jurisdiction other than England and Wales
• Tax, accounting or regulatory advice
• Disputes about a contract that is already signed

Questions I am often asked

The contract says the price is linked to inflation. Which inflation?

Whatever index the clause names, and if it names none the clause is open to argument. The review identifies the index, the series and the base date, runs the formula on the current figures, and asks for the index that matches the supplier's costs and a fallback if it is discontinued.

Our supplier can increase prices on notice at any time. Can we stop that?

You can ask for a cap, a stated frequency, notice, and a right to terminate without penalty if the increase exceeds the cap; against a business dealing on the supplier's standard terms, an unlimited right to vary may also be subject to the reasonableness test. The review drafts the alternative.

Can we index our consumer subscription prices?

You can, with a clause that names the index and the formula, gives notice of each increase and offers the consumer a right to cancel, which keeps the term off the unfair terms grey list. The review drafts it and checks it against the transparency requirement.

Related guidance and services

• Contract review, £495, the service this page describes
• Terms and conditions drafting, £995
• Reviewing a most favoured customer clause
• Reviewing a force majeure clause

This page is general guidance for businesses in England and Wales, not advice on your own circumstances. Last reviewed: September 2026. Email geoffrey@caesar.co.uk.