Price adjustment clauses are a key instrument for managing price risks in volatile markets and for securing long-term contractual relationships. They enable the establishment of stable supply agreements that remain aligned with market developments over time. At the same time, they foster collaborative partnerships with suppliers, for example in projects involving material harmonization or value analysis.
The Price Clause Act (PrKG) governs the admissibility of price adjustment clauses in contracts involving monetary obligations in Germany. According to Section 1 PrKG, automatic price linkage is generally prohibited if the referenced goods or services are not comparable to the contractual performance.
However, two types of clauses are permitted, particularly relevant in procurement:
Such clauses are only permissible if they are sufficiently specific (Section 2 (2) PrKG), meaning they must clearly indicate which price notations or indices are applied and how the calculation is performed. Furthermore, they must not result in an unfair disadvantage to one party (Section 2 (3) PrKG). Transparency, traceability, and a documented model description are therefore essential.
The outcome of a price adjustment model depends significantly on the parameters chosen. Influencing factors include:
Sources of error such as vague contract wording, unsuitable indices, or manual processing mistakes can lead to significant effort and disputes. Avoid these by:
When using market notations in your pricing models, always observe the licensing terms of the sources from which the notations are obtained.
If the data is only licensed for internal use, you may not share it with your contractual partners. In such cases, your contractual partner must obtain the data themselves based on the information specified in the contract and calculate the new prices using the agreed method.
You then compare the results without exchanging the actual notations. The results must match if the calculation method and referenced notations are clearly defined in the contract.
Combine the appropriate clause type with suitable reference notations, a clear model description, and automated updates. This ensures transparency, secures competitive advantages, and maintains your ability to act even in volatile markets.
Our platform HGS Research offers a wide range of market notations for use in your pricing models. Filter relevant supplier or upstream market prices and save favorites for recurring updates. A personalized live demo will show you all the benefits.
Contact HGS for more information: info@hgs-info.net
Katja Stratmann, Handelsgesellschaft Sparrenberg mbH, Brokstraße 77, 33605 Bielefeld
