Escalator Clause is a clause in a lease or contract that guarantees a change in the agreement price once a particular factor beyond control of either party affecting the value has been determined. Also a provision in loan agreements that permits a lender to raise interest rates if the market interest rates go over a certain ceiling, or if some contingency occurs, such as a decrease in the borrowers credit score.

The Escalator Clause is common in contracts delivered over a long period of time, an escalation clause protects the contractor against a general rise in costs especially in a climate of high inflation. Typical escalator clauses provide for increases in wages based on increases in the cost of living index, or higher rent or other charges based on high fuel or maintenance costs.