Price Adjustment Clause

In international sale of goods, some contracts stipulate different price adjustment clauses besides specific prices.

For example, "if the seller's paction price to other customers is higher than or below the contract price 5%, the quantity of the contract is not executed, the two sides negotiate to adjust the price".

The purpose of this approach is to set the risk of price changes within a certain range in order to enhance customer confidence in business.

It is worth noting that in the international arena, with the intensification of inflation in many countries, there are some commodity contracts, especially in the machinery and equipment contracts with long processing cycles. The so-called "price adjustment (Amendment) clause" (PriceAdjustment[Revision]Clause) is generally adopted, which requires only the initial price (InitialPrice) at the time of the contract. At the same time, the Seller reserves the right to adjust the price if the price of raw materials and wages change.

The basic content of the above price adjustment clause is to calculate the final price of the contract according to the change of raw material prices and wages.

Under inflation conditions, it is essentially a means for exporters to pass on domestic inflation and ensure profits.

This practice has been incorporated into some "standard contracts" formulated by the United Nations Economic Commission for Europe, and its application scope has been extended from the original mechanical equipment paction to some primary commodity pactions, so it has a certain universality.

Since such clauses are based on changes in wages and raw material prices as the basis for adjusting prices, we must pay attention to the choice of wage index and raw material price index when using such clauses, and make them clear in the contract.

In addition, in international trade, people sometimes use price index as a basis for adjusting prices. If the price index changes over a certain range during the contract period, the price is adjusted accordingly, that is, when the price adjustment clause is used, the high speed of the contract price is conditional.

As long as the various factors used to adjust the price change during the contract period.

Generally speaking, the price stipulated in the contract is not binding on the parties concerned. The two parties must strictly enforce the contract.