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Simple English definitions for legal terms
fluctuating clause
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A quick definition of fluctuating clause:
A fluctuating clause is a part of a contract that allows for the price to change based on certain conditions. For example, if taxes or operating costs go up, the price of the contract may also go up. This can also apply to alimony payments in a divorce agreement, where the payments may increase if certain events happen, like a cost-of-living increase or a salary increase for the person paying the alimony. In the oil and gas industry, a fluctuating clause may allow for the base price of gas to be adjusted as the market changes. This clause is also called an escalation clause.
A more thorough explanation:
A fluctuating clause, also known as an escalator clause, is a provision in a contract that allows for the adjustment of the contract price based on changing market conditions. This means that the price can increase or decrease depending on factors such as taxes or operating costs.
For example, a construction contract may include an escalator clause that allows for the price to increase if the cost of materials or labor goes up. Similarly, a divorce agreement may include an escalator clause that automatically increases alimony payments if the obligor's salary increases.
In the oil and gas industry, a fluctuating clause may be included in a long-term gas contract to allow for adjustments to the base price of the gas as the market changes.
It's important to note that escalation clauses for child support are often unenforceable.
Overall, a fluctuating clause provides flexibility in contract pricing and allows for adjustments to be made based on changing circumstances.