Step-by-step explanation:
is a contract provision that allows for an automatic increase in the agreed-upon wages or prices if certain conditions change while the contract is in effect.
An adjustment to a labor contract may be triggered by an increase in the inflation rate. An adjustment to a business-to-business contract may be triggered by an increase in expenses necessary to fulfill the agreement. A landlord may demand an escalation clause in a long-term rental agreement to cover any tax increases or a substantial change in market conditions.