You Might Be Thinking…

“Aren’t they the same thing?”
They’re not. An inflation clause ties only to inflation, i.e., the consumer price index. A price clause is broader – it can reflect changes in costs, raw material prices, or production expenses.

Clients Often Ask Me…

• When is an inflation clause better, and when a price clause?

• How do their legal frameworks differ?

• Can they be combined?

• Is there a risk of invalidity if they are vaguely worded?

• How are limits for price increases calculated?

Price vs. Inflation Clause in a Nutshell

• Inflation clause: refers to the inflation index (e.g., CPI by the Czech Statistical Office, Eurostat). Adjusts the price by inflation.

• Price clause (§ 2154 Civil Code): refers to production costs or the prices of main raw materials.

• Scope: the inflation clause addresses only inflation; the price clause covers other variables.

• Use: inflation clause – rental agreements, long-term services; price clause – construction, energy, supply contracts with fluctuating inputs.

Risks and Common Mistakes

• Mixing them up – the client wanted to cover costs but only had inflation protection.

• Uncertainty – “the price will increase according to inflation” without specifying the index → invalid.

• One-sided advantage – if the clause favors only the seller, it risks litigation.

• No cap – the price can rise indefinitely, which is unbearable for the buyer.

How to Arrange These Clauses Step by Step

1. Decide what you want to monitor – inflation or costs.

2. Specify a clear index or input factor – e.g., “consumer price index by the Czech Statistical Office.”

3. Agree on the calculation method – formula or percentage.

4. Set a ceiling and a floor – maximum and minimum adjustment.

5. Record the clause clearly in the contract.

Lawyer’s Recommendation

• For lease agreements, an inflation clause usually suffices.

• For supply contracts, I recommend a price clause.

• Always specify the index and set limits – otherwise you risk invalidity.

• Combining both clauses is possible, but only if clearly described.

Checklist for a Proper Clause

✔ clear index (inflation, costs, raw materials)
✔ calculation method
✔ ceiling and floor of adjustment
✔ balance for both parties
✔ written into the contract

FAQ

Can I have both clauses in one contract?
Yes, but each must be clearly defined.

What is the most common index for inflation?
The Consumer Price Index (CPI) published by the Czech Statistical Office.

Is a clause valid without a limit?
Yes, but highly risky – a ceiling is strongly recommended.

What if the clause is missing?
The price remains fixed, regardless of inflation or cost changes.