Adjustment Provision:
noun
1. A clause or provision included in a contract or agreement that allows for modifications or changes to be made to certain terms or conditions, typically in response to specific circumstances or events.
2. A legal provision that grants the authority or power to make adjustments or alterations to a particular aspect of a contract, such as the price, payment terms, or delivery schedule, in order to accommodate unforeseen changes or contingencies.
3. A contractual provision that enables parties involved to negotiate and agree upon adjustments or modifications to the terms of an agreement, ensuring fairness and flexibility in the face of changing circumstances or market conditions.
4. A provision in insurance policies that allows for adjustments to be made to coverage limits, premiums, or deductibles based on changes in risk factors, such as the insured property’s value, location, or usage.
Overall, an adjustment provision serves as a mechanism to address and adapt to changing circumstances, providing a means for parties to modify or amend contractual terms in a fair and equitable manner.
An adjustment provision is a legal clause or provision that allows for the modification or adjustment of certain terms or conditions in a contract or agreement. This provision is typically included to provide flexibility and accommodate changes in circumstances that may arise during the term of the contract.
The adjustment provision may specify the circumstances under which adjustments can be made, such as changes in market conditions, inflation, or unforeseen events. It may also outline the process for requesting and implementing adjustments, including any notice requirements or dispute resolution mechanisms.
The purpose of an adjustment provision is to ensure fairness and equity in contractual relationships by allowing parties to adapt to changing circumstances without having to terminate the contract or resort to litigation. It provides a mechanism for parties to renegotiate certain terms or conditions to reflect current realities and avoid potential hardships or inequities.
However, it is important to note that the scope and extent of adjustments that can be made under an adjustment provision may vary depending on the specific language and intent of the provision. Parties should carefully review and negotiate the terms of the adjustment provision to ensure that it aligns with their respective interests and expectations.
Overall, an adjustment provision is a valuable tool in contract drafting that allows parties to address unforeseen changes and maintain a fair and balanced contractual relationship.
Q: What is an adjustment provision?
A: An adjustment provision is a clause in a contract or agreement that allows for changes to be made to certain terms or conditions under specific circumstances.
Q: When is an adjustment provision typically used?
A: Adjustment provisions are commonly used in contracts for financial instruments, such as bonds or loans, to account for changes in interest rates, inflation, or other economic factors.
Q: What are some examples of events that may trigger an adjustment provision?
A: Events that may trigger an adjustment provision include changes in market conditions, changes in the value of a specific asset, or changes in the financial health of a party to the contract.
Q: How are adjustments typically calculated under an adjustment provision?
A: The specific calculation for adjustments under an adjustment provision will vary depending on the terms of the contract, but they are typically based on objective, verifiable data such as market indices or financial benchmarks.
Q: Can an adjustment provision be negotiated or customized in a contract?
A: Yes, adjustment provisions can be negotiated and customized to meet the specific needs and concerns of the parties involved in the contract.
Q: What are the potential benefits of including an adjustment provision in a contract?
A: Including an adjustment provision in a contract can help to mitigate the risk of unforeseen changes in market conditions or other factors that could impact the terms of the agreement. It can also provide a mechanism for addressing changes in circumstances in a fair and equitable manner.
Q: Are there any potential drawbacks to including an adjustment provision in a contract?
A: One potential drawback of including an adjustment provision is that it may introduce complexity and uncertainty into the contract, particularly if the calculation of adjustments is based on subjective or difficult-to-verify data. Additionally, parties may disagree on the appropriate adjustments to be made, leading to disputes.
This site contains general legal information but does not constitute professional legal advice for your particular situation. Persuing this glossary does not create an attorney-client or legal adviser relationship. If you have specific questions, please consult a qualified attorney licensed in your jurisdiction.
This glossary post was last updated: 11th April 2024.
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