The contract price change clause is an essential element of any agreement that involves goods or services. It outlines the terms under which the cost of the goods or services can be adjusted. This clause can protect both the buyer and seller from unexpected changes that may occur during the course of a project.
When drafting a contract price change clause, it is essential to be clear and concise. The clause should clearly indicate the circumstances under which the price adjustment can occur. It should also specify the process for making a request for a price change and the time frame in which the request must be made.
One common reason for a price change is due to changes in the cost of materials or labor. In this case, the clause should outline how these costs will be calculated and how they will impact the overall cost of the project.
Another factor that may result in a price change is a change in scope. If the client requests additional work or modifications to the original agreement, the cost of the project may increase. The clause should specify how these changes will be assessed and how the cost of the additional work will be calculated.
It is important to note that a contract price change clause can also protect the seller. If there are unexpected changes in the market or circumstances beyond their control, the clause can allow them to adjust the price to account for these changes.
Overall, a contract price change clause is an essential element of any agreement that involves goods or services. It can protect both the buyer and seller from unexpected changes and ensure that the project remains profitable and successful.