ECONOMICS

Detailed explanation-1: -An escalation clause is a clause in a contract that guarantees a change in the contract price once a particular factor beyond the control of either party results in an increase or decrease in the Contractor’s costs.

Detailed explanation-2: -A de-escalation clause is a contractual provision that allows prices to be lowered after the contract is signed. It is the opposite of an escalation clause, which allows prices to be raised. De-escalation clauses can help ensure that contracts are fair and sustainable for both parties.

Detailed explanation-3: -What is a price escalation clause? An escalation clause allows a contractor to impose price increases in materials upon the owner after a contract has been signed, thereby shifting the risk of absorbing the price increases from contractor to owner.