Escalator clause or escalator

Escalator clauses are provisions that allow for an automatic increase in wages or prices under certain conditions.

They make it easier for people to enter large or long-term contracts without worrying that future changes in the market could come back to bite them.

Escalator clauses can guarantee wage increases are tied to inflation, protect landlords from missing out on higher rents or help property buyers to win auctions.

Sometimes escalator clauses include a cap on the allowed increases.

Source: Investopedia

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