You Might Be Thinking…

“This is just a trick suppliers use to raise prices.”
Not necessarily. A price clause can protect both parties. If prices fall, the buyer benefits. If they rise, the supplier isn’t forced into financial ruin.

Clients Often Ask Me…

• When does it make sense to agree on a price clause?

• What can it be linked to – raw material costs, inflation, exchange rates?

• How is the relevant period for comparison determined?

• What happens if delivery is delayed?

• Can we set minimum and maximum adjustment limits?

Legal Framework in Brief

• Section 2154 Civil Code: The purchase price may be adjusted with respect to production costs, particularly the cost of key raw materials.

• Section 2155 Civil Code: If the parties do not set a reference period, the comparison is made between prices at contract conclusion and at the time of delivery.

• Section 2156 Civil Code: Rights under a price clause lapse if not exercised without undue delay after delivery.

How to Negotiate a Price Clause in Practice

1. Define the Criteria

• Price of the main raw material (e.g. steel, wood, plastic).

• Inflation (Czech Statistical Office, HICP).

• EUR/CZK exchange rate.

2. Reference Period

• Typically from contract signing until delivery.

• For long-term contracts, regular recalculation (quarterly/annually).

3. Adjustment Limits

• Set minimum and maximum thresholds (e.g. ±10%).

• Prevents extreme price swings.

4. Procedure for Enforcement

• The party must document new prices (invoices, indexes).

• Claims must be made without undue delay after delivery.

Risks and Common Mistakes

• Overly vague clause → unclear how the price is calculated.

• No limits → risk of excessive increases.

• Undefined exchange rate → disputes about which rate to use (Czech National Bank vs. commercial bank).

• Late enforcement → rights expire.

Lawyer’s Checklist

✔ Set a clear indicator (raw material, inflation, exchange rate).
✔ Define the reference period.
✔ Include adjustment limits.
✔ Establish procedure and deadlines for enforcement.

FAQ

Are price clauses common in small contracts too?
They are more common in larger or long-term agreements.

Can they also lead to price reductions?
Yes, if costs fall.

Must a price clause always be in writing?
Yes – precise written wording is essential, otherwise it is unenforceable.