Pactora Clause Guide
Fee Increases
A fee increase clause lets the supplier raise their prices during the contract term, typically linked to an index such as CPI or at the supplier's discretion.
This guide was written by Sneha Ganapavarapu, a qualified lawyer with experience in commercial contracts across technology, IP, and energy sectors. All legal sources are linked. This is general legal information, not legal advice. Always consult a qualified solicitor before signing any contract that matters to your business.
Plain English
What it is
A fee increase clause gives the supplier a right to increase the contract price during the term or at renewal. The increase can be linked to a published index such as the Consumer Price Index (CPI) or the Retail Price Index (RPI), or it can be at the supplier's discretion subject only to a notice period.
The risk is that discretionary increases are unlimited in theory and short notice periods leave you no practical ability to switch supplier before the increase takes effect.
For UK freelancers & small businesses
What reasonable looks like
Increases capped at the lower of 5% per year or the applicable CPI/RPI figure.
At least 30 to 60 days written notice of any increase before it takes effect.
The right to terminate the contract on reasonable notice if you do not accept the increase.
No retroactive increases — fees only go up from the start of the next billing period.
Increases permitted no more than once per year.
Watch out for
Red flags
Uncapped discretionary increases — supplier can set any price they wish with only notice as a brake.
Increases effective immediately or on very short notice (under 30 days).
No right to exit if you reject the increase.
Increases allowed mid-contract at any time, not just at renewal.
Vague references to "reasonable increases" or "market rates" with no objective benchmark.
Supplier can increase fees to reflect increased costs of supply, which is effectively unlimited.
England & Wales
Market standard UK position
Annual increase capped at CPI or RPI, measured from a published date.
30 to 60 days advance notice before any increase.
Termination right if increase exceeds a set threshold.
Increases applied no more than annually.
No mid-term increases outside of defined triggers such as tax changes.
Legal advice triggers
Ask your lawyer if…
The increase is discretionary and uncapped.
The notice period is under 30 days.
There is no exit right if you reject the increase.
Increases can be applied more than once a year.
References
Legal sources
Unfair Contract Terms Act 1977 — reasonableness test can apply to discretionary price variation clauses in B2B contracts.
Baird Textile Holdings Ltd v Marks & Spencer plc [2001] EWCA Civ 274 — on variation and unilateral contractual change mechanisms.
CPI data — UK Consumer Price Index, Office for National Statistics. Relevant as the standard benchmark for permitted fee increases.
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Further reading
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