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Fluctuating Clause: A Comprehensive Guide to Its Legal Significance
Definition & Meaning
A fluctuating clause is a provision found in various contracts that allows for adjustments to the contract price based on changes in market conditions. This may include factors such as increases or decreases in taxes or operating costs. In family law, it can refer to a provision in a divorce decree that automatically adjusts alimony payments in response to specific events, like cost-of-living increases or changes in the income of the paying partner. In the context of oil and gas agreements, it refers to a clause that adjusts the base price of gas according to market fluctuations. This clause is also commonly known as an escalator clause.
Table of content
Legal Use & context
Fluctuating clauses are utilized in various legal contexts, including:
Contract Law: Often included in commercial contracts to ensure that pricing remains fair over time.
Family Law: Used in divorce agreements to provide for fair alimony adjustments based on economic changes.
Energy Law: Found in long-term contracts in the oil and gas industry to reflect market price changes.
Users can manage related legal processes using templates from US Legal Forms, which are drafted by qualified attorneys.
Key legal elements
Real-world examples
Here are a couple of examples of abatement:
Example 1: In a commercial lease agreement, a fluctuating clause may state that the rent will increase annually based on the Consumer Price Index (CPI).
Example 2: In a divorce settlement, a fluctuating clause may provide that alimony payments increase by a certain percentage if the paying partner receives a salary increase (hypothetical example).
State-by-state differences
Examples of state differences (not exhaustive):
State
Variation in Use
California
Commonly used in both commercial and family law agreements.
Texas
Frequently included in oil and gas contracts.
New York
Used in commercial leases but less common in family law.
This is not a complete list. State laws vary, and users should consult local rules for specific guidance.
Comparison with related terms
Term
Definition
Key Differences
Escalator Clause
A provision that allows for automatic increases in payments.
Generally refers to increases only, while fluctuating clauses can adjust both ways.
Fixed Price Contract
A contract where the price does not change over time.
Fluctuating clauses allow for price changes based on market conditions.
Common misunderstandings
What to do if this term applies to you
If you are entering into a contract that includes a fluctuating clause, it is essential to understand how it affects your financial obligations. Consider the following steps:
Review the clause carefully to understand the conditions for adjustments.
Consult with a legal professional if you have questions about your rights and obligations.
Explore US Legal Forms for templates that can help you draft or review agreements that include fluctuating clauses.
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