1. A contractual provision that makes pricing flexible by increasing or decreasing the contract price according to changing market conditions, such as higher or lower taxes or operating costs. [Cases: Contracts 229, 231. C.J.S. Contracts §§ 378, 385, 387–391, 393–398.]
2. A provision in a divorce decree or divorce agreement providing for the automatic increase of alimony payments upon the occurrence of any of various triggering events, such as cost-of-living increases or an increase in the obligor’s salary. • Escalation clauses for child support are often unenforceable.
3. Oil & gas. A provision in a long-term gas contract allowing the base price of the gas to be adjusted as the market changes. • The actual adjustment may be up or down. — Also termed escalation clause; fluctuating clause.
