Engineering Board Exam Reviewer · ECE · easy

A contract clause that allows the price to be adjusted when material or labor costs change significantly is called an:

  1. Arbitration clause
  2. Force majeure clause
  3. Escalation (price adjustment) clause
  4. Indemnity clause

Answer

C. Escalation (price adjustment) clause

Solution

In government contracts, price escalation is generally allowed only under extraordinary circumstances.

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