A price review clause sits between a fixed price and a floating one. The price holds unless a named input moves by more than an agreed amount, at which point either party may call a review under a defined procedure. It is common in seasonal agricultural supply, where a twelve-month fixed price is either a gamble or a risk premium the buyer pays for nothing.
What a usable clause names
- The trigger. Which input, measured against which published reference, and over which averaging period.
- The threshold. How far the reference has to move before the clause opens, so that ordinary noise does not trigger it.
- The pass-through. Whether the whole movement or a share of it flows into the price, and whether it is symmetrical in both directions.
- The mechanism. Who calls the review, in what form, within what notice period, and from which date the new price applies.
- The fallback. What happens if the parties do not agree: the old price continues, the contract terminates for future call-offs, or a defined formula applies.
Where they fail
A clause with no published reference is unusable, because the parties end up arguing about whose data is correct. A clause that is open in one direction only will not be honoured in practice. And a clause with no fallback converts a pricing disagreement into a supply interruption at the worst moment.
Asymmetry is worth naming explicitly rather than leaving to inference. If the buyer wants protection against a rise but not exposure to a fall, that is a position it can take, and it will be priced.
How fixed, indexed, formula and cost-plus models compare is set out in the pricing models guide. Vorezan is an information platform and not a legal or commercial adviser; take your own advice on contract drafting.