Common use of Price Protection Clause in Contracts

Price Protection. If the relationship involves periodic payments over an extended period of time, the vendor will want the freedom to raise prices in the future rather than be locked in to the current pricing indefinitely. The customer in this circumstance will want to seek some form of price protection, such as a period for which no increases are permitted and thereafter that increases may be made only annually, and then only up to a maximum amount. These limiting amounts can be based on a percentage of the current pricing, COLA-type external percent- ages, or a combination of both (and either the greater or lesser of these percentages).

Price Protection. If the relationship involves periodic payments over an extended period of time, the vendor will want the freedom to raise prices in the future rather than be locked in to the current pricing indefinitely. The customer in this circumstance will want to seek some form of price protection, such as a period for which no increases are permitted and thereafter that increases may be made only annually, and then only up to a maximum amount. These limiting amounts can be based on a percentage of the current pricing, COLA-type external percent- agespercen- tages, or a combination of both (and either the greater or lesser of these percentages).