How to read the index clause in a quotation

What a usable clause contains

Four things: which input floats, which published index it tracks, the base date the price was calculated on, and how far it must move before the price changes. A clause missing any of the four shifts the risk back to the buyer without saying so.

Where the arguments come from

Almost always from the base date. A price quoted in one month and confirmed in another has a gap in the middle, and whoever holds the gap decides which month’s index applies. Write the base date into the order, not the email.

The threshold matters more than the index

A clause that adjusts on any movement is not a hedge, it is a monthly renegotiation. A threshold of a few percent absorbs the noise and leaves only the moves worth discussing. Ask what the threshold is before asking what the index is.

What we do with freight

Ocean freight is quoted at sailing, not at order. Say so in the quotation, and give the buyer the choice: fix it with a surcharge, or leave it open and accept the sailing-date rate. Both are honest; silence is not.

One line to add

“Index changes below the threshold are absorbed by the supplier; above it, the difference is passed through with the index print attached.” That single sentence removes most of the argument later.