You Might Be Thinking…

“But isn’t the price supposed to be fixed?”
Yes, but the law (Civil Code § 2154 and following) also allows an agreement that the price may later be adjusted according to certain indicators – such as raw material prices, production costs, or inflation.

Clients Often Ask Me…

• Is a price clause in a purchase agreement valid?

• What can be used as the basis for adjusting the price?

• How do I draft the clause so the court won’t find it vague?

• How is it different from an inflation clause?

• Can it be advantageous for both parties?

Price Clause in a Nutshell

• Essence (§ 2154 Civil Code): the price is adjusted later with regard to production costs or the price of main raw materials.

• Form: it must be clearly stated what the adjustment is based on (e.g., steel price according to the Statistical Office, inflation index of the Central Bank).

• Difference from inflation clause: inflation clauses only follow inflation, while price clauses cover a broader range of costs.

• Use: long-term contracts, construction, energy, supply of goods with fluctuating prices.

Risks and Common Mistakes

• Vague wording – “the price will adjust according to costs” → the court may declare it invalid.

• One-sided advantage – if the clause benefits only one party, it risks invalidity due to imbalance.

• Missing time reference – it’s unclear whether the price should be measured at signing, delivery, or another point.

• Confusing it with inflation clauses – clients often think they are the same.

How to Arrange a Price Clause – Step by Step

1. Choose a suitable index or cost factor (e.g., oil price, construction cost index).

2. Define the relevant period – between contract signing and delivery.

3. Set the calculation method – percentage change, fixed formula.

4. Agree on limits – maximum or minimum adjustment range.

5. Write the clause clearly and unambiguously in the contract.

Lawyer’s Recommendation

• A price clause makes sense in long-term or high-risk contracts – short-term trades usually don’t need it.

• Draft it precisely – linked to a publicly available index.

• Have the clause reviewed by a lawyer – to avoid later invalidity.

Checklist for a Valid Price Clause

✔ specific index or raw material
✔ defined time frame
✔ calculation method
✔ adjustment limits
✔ clear contract wording

FAQ

Is a price clause legal?
Yes, if it is drafted clearly and fairly (§ 2154–2156 Civil Code).

How is it different from an inflation clause?
Inflation clauses respond to inflation, while price clauses respond to production costs or raw material prices.

Can we agree on a maximum price increase?
Yes, it’s recommended to set both a ceiling and a floor to make the clause balanced.

What if the clause is missing?
The originally agreed price applies, even if costs change dramatically.