Question

Rylee has a contract to build Cincia a beautiful custom kitchen. Because of the Heineken Virus Rylee feels some of the materials she was planning to import from Holland may be difficult to get and significantly increase in price. Rylee has inserted a clause into the contract to protect her profits from price increases. What is this called? Is it legal?

Answer 1

The clause that Rylee has inserted into the contract to protect her profits from price increases is called a price escalation clause, and its legality depends on the terms and conditions mentioned in the contract and the applicable laws.

Step-by-step explanation:

The clause that Rylee has inserted into the contract to protect her profits from price increases is called a price escalation clause. This type of clause is commonly used in contracts when there is uncertainty about the future prices of certain materials or services. The purpose of a price escalation clause is to ensure that if the cost of certain materials increases, the party responsible for procuring those materials can pass on the cost to the other party.

Whether a price escalation clause is legal or not depends on the terms and conditions mentioned in the contract and the applicable laws of the jurisdiction. In most cases, as long as the clause is reasonable and does not violate any laws or regulations, it is considered legal.