Resin Price Adjustment (Surcharge) Clause Template for Molded Part Supply Agreements
Fixed-price molded part contracts leave the molder exposed when resin moves, and customers worry about open-ended surcharges. A clear adjustment clause with a published index, a trigger band, a cap and notice protects both sides. This template gives you the clause text and the schedule to calculate each adjustment.
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Resin Price Adjustment Surcharge Clause Template
Resin Price Adjustment Clause
This clause forms part of Supply Agreement SA-2026-014 between Midwest Precision Molding Inc. (Supplier) and Northline Appliance Co. (Customer) and applies to PN 48213 Housing Cover, polypropylene.
The quoted price assumes a base resin price equal to the Base Index Price of 1.05 USD per pound for Polypropylene copolymer, 20 MFI, as published by Published monthly contract price assessment for PP copolymer, US Gulf, cents per pound (the Index). Resin weight per part including the allocated runner share is 0.469 lb.
Adjustment Mechanism
Quarterly, the Supplier will compare the average Index value of the preceding period with the Base Index Price. If the difference exceeds 3 percent of the Base Index Price in either direction, the part price will be adjusted for the following period by:
Adjustment per part = (Average Index - Base Index) x Resin weight per part
Adjustments apply in both directions. Changes within the trigger band do not adjust the price.
Notice, Cap and Effective Date
The Supplier will give the Customer 15 days written notice of each adjustment with the Index data and calculation. Any single adjustment will not exceed 5 percent of the then-current part price unless the parties agree otherwise in writing. This clause takes effect on 2026-11-01.
The Customer may audit the Index data and calculation on request. If the Index ceases to be published, the parties will agree a comparable index in good faith.
Calculation Schedule
| Period | Average Index (USD/lb) | Base Index (USD/lb) | Difference | Resin weight (lb) | Adjustment per part (USD) |
|---|---|---|---|---|---|
| Q1 | 1.05 USD per pound | 0.469 | |||
| Q2 | 1.05 USD per pound | 0.469 | |||
| Q3 | 1.05 USD per pound | 0.469 | |||
| Q4 | 1.05 USD per pound | 0.469 |
Acknowledgement
This template is a starting point, not legal advice. Have counsel review before use. Terms such as the index, trigger band, cap and review frequency are negotiable and should be balanced between both parties. Check whether your customer's purchasing terms already prescribe a material adjustment mechanism.
Automated resin surcharge calculation
Optional: see how index data and bill of material resin weight could drive surcharge invoices from your ERP.
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How to use it
Fill in the parties, agreement reference, part and resin grade, then the index you will reference, the base price embedded in your quote, the trigger band and the cap. Enter the resin weight per part including the runner share, because the adjustment is in pounds of resin consumed. Download as Word to paste into a supply agreement or purchase order terms, or attach as a pricing schedule. Use the resin price impact calculator to size the exposure before you propose the percentages.
Clause design
A workable clause names a published index the customer can check, sets the base price that is already inside the part price, and calculates the adjustment as index change times resin weight. A trigger band avoids constant small repricing, symmetric treatment makes the clause fair when prices fall, and a cap prevents large shocks. Notice and audit rights make the mechanism auditable.
- Index: a published, independent price assessment, not your supplier invoice
- Trigger band: commonly 2 to 5 percent of the base
- Frequency: monthly to quarterly, matching the index cycle
- Cap: limits shock; define what happens beyond it
Worked example
With a base of 1.05 dollars per pound, resin weight of 0.469 pounds per part and a quarterly average of 1.29, the difference is 0.24 dollars per pound, above the 3 percent band. Adjustment per part is 0.24 times 0.469, about 0.113 dollars. If the part price is 2.40, this is 4.7 percent and sits within the 5 percent cap. If the index drops back to 1.07, the change is within the band and the price returns to base only after the index falls below the trigger, per your drafting.
Common mistakes
Linking to a supplier invoice rather than a public index, forgetting the runner and scrap share in resin weight, writing the clause one way only so it never lowers the price, and not stating the base price. Also check that the clause does not conflict with a customer's own purchasing terms or a long-term price agreement.
Frequently Asked Questions
Which index should I reference?
Choose a published, independent assessment for your resin family that both parties can access, such as a monthly contract price report from a recognised market publisher. Avoid your own supplier invoice, which the customer cannot verify.
Why include a trigger band?
A band of a few percent stops the price changing with every small market move, which reduces administration for both sides. It also gives the customer predictability while still protecting the molder from larger swings.
Should the clause work both ways?
Yes. A symmetric clause that lowers the price when the index falls is easier to negotiate and is normally expected by procurement. It also keeps the relationship credible if prices turn.
Is this legal advice?
No. It is a generic starting point. Contract law and customer terms vary, so have counsel review the final language before you sign, especially for large programs or regulated industries.
Netray can help connect index data, resin usage and part prices in your ERP so surcharges are calculated and documented automatically each period.
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