1.  In respect of existing business-to-business (B2B) agreements that do not contain an explicit price adjustment clause:
    1. a. Is the supplier permitted to unilaterally increase prices (or does it have other rights regarding price increases)? If so, to what extent?
    2. b. Do (extreme) price increases give the customer the right to terminate the agreement? If so, are there any specific rules or regulations to comply with?
  2.  In respect of future B2B agreements:
    1. a. Is it permissible to include an explicit price adjustment clause in the agreement? If so, what price adjustment clauses typically exist in your jurisdiction?
    2. b. What legal issues need to be considered (if any) to ensure that the price adjustment clause is enforceable? Is there any key legislation or case law that parties should be aware of regarding enforceability of price adjustment clauses in your jurisdiction?
    3. c. Are there any other issues that parties should consider when formulating a price adjustment clause (e.g. any sector-specific regulation)?
  3. Do any additional considerations or rules apply to the inclusion of price adjustment clauses in business-to-consumer (B2C) agreements?

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Switzerland
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1. In respect of existing business-to-business (B2B) agreements that do not contain an explicit price adjustment clause:

a. Is the supplier permitted to unilaterally increase prices (or does it have other rights regarding price increases)? If so, to what extent?

In general, according to the contractual principle of pacta sunt servanda ("agreements must be kept"), parties to a contract are obliged to abide by what they have agreed upon. As a result, a price increase may only be claimed based on either a contractually agreed price increase clause or a statutory provision permitting price amendments (e.g. in contracts for work pursuant to Art. 373 (2) of the Swiss Code of Obligations). Otherwise, in general, prices may not be amended unilaterally.  

However, according to the concept of clausula rebus sic stantibus, a party may unilaterally request the change of contractual clauses, including the price clauses, if certain requirements are met. In order to raise the exception of clausula rebus sic stantibus, the fulfillment of a contract must have become extremely onerous in a way which was not foreseeable when the contract was concluded.  

Accordingly, in case of extreme and unforeseeable price changes, a party may request that the contract be renegotiated. The parties may agree on revised conditions, or agree to terminate the contract. If one party insists that the contract remains unchanged, the requesting party might approach the court and seek a decision from the court ordering an amendment to the agreement, or its termination. 

Whether a situation allows the raising of the exception of clausula rebus sic stantibus must be decided on a case by case basis, taking into account among others the circumstances at hand, the experience of the parties involved as well as the terms of the contract. In general, the courts set the threshold quite high. 

b. Do (extreme) price increases give the customer the right to terminate the agreement? If so, are there any specific rules or regulations to comply with?

As mentioned in Question 1(a) above, price increases are only possible if (i) contractually agreed, (ii) allowed under a statutory provision permitting price amendments or if (iii) the exception of clausula rebus sic stantibus can be validly raised.  

In case an exception of clausula rebus sic stantibus, raised by the seller, would result in an extreme price increase, the buyer may request the termination of the contract if such price increase is unreasonable for him. 

Where price increases are based on the contract or allowed under a statutory provision, the buyer may terminate the contract only if he can raise the exception of clausula rebus sic stantibus; i.e. where the fulfillment of the contract has become extremely onerous in a way which was not foreseeable when the contract was concluded. Again, this has to be assessed on a case-by-case basis.

2. In respect of future B2B agreements:

a. Is it permissible to include an explicit price adjustment clause in the agreement? If so, what price adjustment clauses typically exist in your jurisdiction?

Yes, it is permissible to include price adjustment clauses in the contract. For the seller, this is particularly useful in long-term agreements. In general, clauses allowing unilateral price changes should be based on verifiable external factors (e.g. indices, benchmarks, reference prices, etc.). Typically, price adjustment clauses are based on indices published by a third party or the government. 

There is no key legislation or case law, which would treat the enforcement of price increase clauses.  

In general, it may be stated that, to enforce a unilateral price increase clause under a contract, the party invoking the clause must prove that all conditions are met with regard to the price change. 

According to the jurisprudence of the Swiss Federal Supreme Court and the prevailing doctrine in Switzerland, a clause allowing a unilateral and substantial change of the price (more than 5-10%) without being based on objective factors, such as an index, risks being invalid. This is particularly true if the other party has no contractual right to terminate the agreement in case of such substantial and "arbitrary" price increase.

c. Are there any other issues that parties should consider when formulating a price adjustment clause (e.g. any sector-specific regulation)?

If the parties declare sector-specific regulations as applicable to their contract, e.g. the regulation SIA 118 for planning and construction of the Swiss Society of Engineers and Architects, such regulations may include rules on price adjustments. 

For public sector contracts, there are special requirements for price adjustments due to raw material price increases. Please refer to our CMS Expert Guide on rising raw material prices.

3. Do any additional considerations or rules apply to the inclusion of price adjustment clauses in business-to-consumer (B2C) agreements?

Article 8 of the Swiss Act Against Unfair Competition (“FUCA”) provides that general terms and conditions in contracts with consumers shall not unfairly provide a significant and unjustified imbalance in the parties' rights and obligations under the contract, to the detriment of the consumer.  

In order to avoid the risk that a price adjustment clause is deemed unfair under Art. 8 FUCA, such a clause should rely on a fair and objective basis, such as a price index. In addition, the price adjustment clause should provide for both increases and decreases, in line with the development of the basis/index chosen.