CMS Expert Guide on Price Increases in Commercial Contracts

Businesses continue to face significant cost pressures and many are having to consider increasing the prices of their goods and services in order to remain viable.

Over the last few years, a range of factors have contributed to increased cost pressures. In particular, the COVID-19 pandemic disrupted global supply chains, increased manufacturing and shipping costs, and changed consumer behaviour. The war in Ukraine has impacted wholesale energy prices and food prices, among other things. Higher interest rates, which are intended to tackle rising inflation, have increased the cost of borrowing for businesses. Increases in the cost of living for consumers has put pressure on businesses to increase wages for their workers, further fuelling inflation.    

So far in 2024, we have seen cost pressures beginning to ease in some areas and global inflation rates starting to fall. However, for many they remain relatively high by recent historic standards and continue to be volatile. Therefore, it is essential for businesses to mitigate their exposure and protect against the risks of further cost increases.

Whether your business is acting as a customer or a supplier of goods or services, including well drafted price adjustment clauses in your contracts could be crucial to the profitability of your business.

Against this backdrop, our Commercial team has prepared this international CMS Expert Guide.

This Expert Guide shines a spotlight on the different legal frameworks affecting price adjustment clauses internationally. It also provides customers and suppliers with a practical insight into key legal risks and important issues to consider when negotiating these types of clauses in goods and services contracts.

In particular, for each jurisdiction, this Expert Guide explores, at a high-level:

• suppliers’ rights to increase prices in, and customers’ rights to terminate, existing business-to-business (B2B) agreements which do not contain explicit price adjustment clauses;
• the permissibility of including price adjustment clauses in B2B agreements and the typical clauses you may expect to see;
• key legal issues affecting the enforceability and formulation of price adjustment clauses in B2B agreements; and
• key considerations in relation to price adjustment clauses in business-to-consumer (B2C) agreements.

This CMS Expert Guide on Price Increases in Commercial Contracts is intended as a general guide only and is not to be taken as legal advice or an exhaustive statement of the applicable laws and regulations. For further legal support and advice, please get in touch with your regular CMS contact or the key contact(s) for your jurisdiction identified on the relevant page in this CMS Expert Guide.