Escalation Clause

An escalation clause is a provision in a contract that allows the price to increase under specific conditions. It is commonly used in real estate and business agreements. For example, if multiple buyers are interested in a property, an escalation clause can enable a buyer to automatically increase their offer up to a certain limit if a competing bid is made. This helps buyers remain competitive without continuously resubmitting offers. Essentially, it adds flexibility to negotiations, allowing for adjustments based on market conditions or competitor actions, while providing a clear cap on the maximum amount the buyer is willing to pay.