De-Escalation Clause

Think about those fights with your significant other. The ones that start in the car, wage over every room of the house and leave both of you with headaches, sore throats and at least one of you googling the phrase “community property rights.” That would be a good time for a de-escalation clause. Or maybe 3 hours earlier.

But that’s not what we’re talking about here.

In this case, the clause is part of a contract that calls for prices to decline under certain conditions. It’s essentially the opposite of an escalation clause.

You run a chain of frozen banana stands. You buy tons of bananas every month. The have...appeal. You’ve signed a long term contract with your distributor...but bananas are selling at all-time highs. There was a military coup in one of the main producing countries and the uncertainty has driven up the price of bananas.

So you put a de-escalation clause in your contract. If banana prices fall for your distributor, your price goes down as well. So if democracy is restored in San Bananita, some of the savings get passed on to you.

There's always money in the banana stand.