Contract Indexation Without Words

Without the basis of indices, contracts would be rendered irrelevant to their context: the indexation of contracts, also called “index linking” or “contract escalation”, is a procedure for contracts periodically adjusting to the prices paid for the contract provisions based on the level of a nominated price index.

Simply put, the purpose of contract indexation is to account for inflation. A consumer price index — a weighted average basket of consumer goods and services purchased by households — is the most common measure of the general price level by which indexation is possible, forming the basis for reference in which contracts assume quality and trustworthiness.

Internality & Externality

Indexation bonded into contracts affects certainty of contractual terms, so that the money unit indexed is causal to the language in which the contract assumes its purpose: it may sound paradoxical to say all contracts are verbalised as soon as they are written down, but that a money unit not verbalised at computational settlement by being free from transaction reversibility or restitution can effectively form the basis for indexation in a verbalised agreement in undertaking of a promise, intention, or guarantee (a contract) where parties freely assume their responsibilities without necessarily reading the terms— in other words, where agency is assumed rather than proved.

The economists' assertion that inflation isn’t a problem clearly doesn’t mitigate litigation in asserting the benefit of a contract, and neither does it mitigate the relationship between inflation and the negative externality of consumption — limiting economic activity as result, regardless of how that activity is measured — in times of low inflation.

The positioning of internalising or externalising the all consuming desire looks to become a matter for decimalised and incremental understanding, and for which judiciaries could be provoked into considering what forms the valid basis for indexation and its representation, that if philosophy is a bewitchment of intelligence by means of language, then so must be the mediation of contractual terms — that if a “contract” is also a physical retreat from its original boundaries in becoming smaller or closer to wider consensual interpretation (less open to misconception), then inflation becomes a matter of linguistic precision, and not just a shopping list of prices of consumables previously paid for in the eyes and minds of economic rationale.

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Jon Gulson

Jon Gulson

Ideas in games, language, and trust.