Exchange rates clause: Copy, customize, and use Instantly
Introduction
An exchange rates clause defines how currency conversions are handled in a contract involving different national currencies. It sets the applicable exchange rate, specifies when and how it's determined, and allocates the risk of currency fluctuations. This clause is especially important in international agreements where payments, pricing, or liabilities span multiple currencies.
Below are templates for exchange rates clauses tailored to different scenarios. Copy, customize, and insert them into your agreement.
Fixed-rate exchange clause
This version locks in a specific exchange rate for the entire agreement.
All amounts payable under this agreement shall be converted at a fixed exchange rate of [X.XX] [Currency A] to [Currency B], as agreed by the parties on the date of execution. This rate shall apply throughout the term of the agreement, regardless of market fluctuations.
Market rate at time of payment clause
This version uses the exchange rate on the actual payment date.
Payments made in a currency other than [specified currency] shall be converted using the exchange rate published by [named source, e.g., Reuters or the European Central Bank] on the date payment is made.
Date-of-invoice exchange clause
This version sets the exchange rate based on the invoice date.
When payment is made in a different currency than invoiced, the applicable exchange rate shall be the rate published by [source] on the invoice date. Any gain or loss due to currency movement thereafter shall be borne by the paying party.
Monthly average rate clause
This version uses an average rate for the relevant billing period.
For invoicing and payment purposes, currency conversions shall use the average monthly exchange rate as published by [source] for the calendar month in which the services or goods were delivered.
Exchange rate fluctuation adjustment clause
This version adjusts pricing based on currency movement beyond a set threshold.
If the exchange rate between [Currency A] and [Currency B] changes by more than [X]% from the rate at the time of contract execution, the parties agree to renegotiate pricing in good faith to reflect the updated rate.
Base currency clause
This version establishes a single currency as the reference for all payments.
All monetary amounts in this agreement are stated in [Currency], which shall be the base currency for all pricing, invoicing, and payments. Any conversion from another currency shall be based on the exchange rate in effect on the payment date.
Payee risk clause
This version assigns exchange rate fluctuation risk to the receiving party.
All payments shall be made in [Currency]. Any difference in value caused by exchange rate fluctuations between invoice date and payment date shall be borne by the payee.
Payer risk clause
This version assigns exchange rate risk to the paying party.
All invoiced amounts must be received in [Currency]. The payer assumes all exchange rate fluctuation risk and must ensure the correct amount is received regardless of currency movement.
Central bank rate clause
This version specifies a central bank rate source.
Currency conversions shall be calculated using the official exchange rate published by the [e.g., Federal Reserve, Bank of England, European Central Bank] on the applicable date.
Currency conversion timing clause
This version defines when the currency conversion is determined.
Currency exchange rates for payment purposes shall be determined at the earlier of (a) the date of payment initiation or (b) the fifth business day after invoice receipt.
Advance payment rate lock clause
This version locks the exchange rate at the time of advance payment.
If an advance payment is made, the exchange rate in effect on the date of that payment shall apply to all related future invoices, regardless of rate changes.
Forward contract exchange clause
This version allows use of a forward contract to manage exchange rate risk.
The parties may use a forward exchange contract to lock in the exchange rate for all payments under this agreement. The agreed rate shall apply regardless of market movement.
Currency of invoice governs clause
This version states that the currency listed in the invoice determines the exchange terms.
The currency stated on each invoice shall control, and any currency conversions shall be based on the published exchange rate on the invoice date, unless otherwise agreed in writing.
Multi-currency pricing clause
This version allows listing prices in multiple currencies.
Pricing may be quoted in both [Currency A] and [Currency B]. If payment is made in a different currency than the quote, conversion shall use the rate on the invoice date published by [source].
Historical rate clause
This version uses a rate from a specific historical date.
For all currency conversions, the exchange rate published on [specific past date] shall apply, unless a more current rate is mutually agreed in writing.
Currency fluctuation buffer clause
This version includes a buffer to absorb small rate changes.
All invoices may include a buffer of up to [X]% to account for minor exchange rate fluctuations between the invoice and payment dates.
Contractually capped fluctuation clause
This version sets a maximum allowable impact from exchange rate changes.
Exchange rate fluctuations shall not increase or decrease the amount payable under this agreement by more than [X]% from the original invoice total. Any difference beyond that cap shall be subject to renegotiation.
Quarterly exchange rate reset clause
This version updates the exchange rate every quarter.
The applicable exchange rate shall be reviewed and adjusted quarterly based on the average rate published by [source] over the previous three months.
Exchange rate dispute resolution clause
This version outlines how to resolve disagreements over rates.
If the parties disagree on the applicable exchange rate, they shall use the midpoint between the rates published by [Source A] and [Source B] on the relevant date. If disagreement persists, a neutral third party shall determine the rate.
Local currency requirement clause
This version mandates payment in a specific local currency.
All payments under this agreement must be made in [local currency], regardless of the payor’s location or the origin of goods or services.
Rate tolerance clause
This version allows minor discrepancies between expected and actual rates.
A difference of up to [X]% between expected and actual exchange rate values shall be deemed acceptable and not require further adjustment or negotiation.
Multi-jurisdiction clause
This version addresses different applicable exchange rates by jurisdiction.
For cross-border transactions, the applicable exchange rate shall be based on the country in which the relevant obligation arises, using the official rate published by its central bank.
Exchange rate on date of signing clause
This version applies the rate from the date the contract is signed.
The exchange rate published by [source] on the date this agreement is signed shall apply to all payments unless otherwise agreed in writing.
Rate freeze on invoice issuance clause
This version freezes the rate once the invoice is issued.
The exchange rate shall be fixed on the invoice issuance date. Any fluctuations after this point will not affect the amount payable.
Agreed midpoint exchange rate clause
This version averages two sources to determine the rate.
The exchange rate shall be calculated as the average of the rates published by [Source A] and [Source B] on the relevant date.
Tiered conversion clause
This version applies different rates depending on payment timing.
Payments made within 15 days of invoice shall use the published rate on the invoice date. Payments made later shall use the rate in effect on the payment date.
Exchange rate audit clause
This version allows review of past conversions.
Either party may request documentation verifying the exchange rate used in payment calculations. Discrepancies shall be addressed within 30 days of notice.
Currency risk sharing clause
This version splits the impact of currency swings.
Any change in the exchange rate of more than [X]% shall result in a 50/50 sharing of the increased or decreased financial impact between the parties.
Currency hedge responsibility clause
This version assigns responsibility for hedging currency risk.
The [Buyer/Seller] shall be solely responsible for hedging against exchange rate fluctuations. No adjustments will be made to reflect rate changes.
Centralized conversion date clause
This version designates a single date for all conversions.
All currency conversions for this agreement shall be based on the exchange rate published on the 15th day of each month, regardless of invoice or payment dates.
Annual rate review clause
This version sets an annual review and adjustment mechanism.
The parties shall annually review and adjust the applicable exchange rate based on average market rates over the prior 12 months.
Country of origin conversion clause
This version uses the rate from the supplier’s country.
Payments shall be converted using the exchange rate published in the country where the goods or services originated, using the rate on the invoice date.
Currency rounding clause
This version specifies how rounding is handled after conversion.
After applying the exchange rate, final amounts shall be rounded to the nearest [whole number/tenth/hundredth] of the base currency.
Conversion source hierarchy clause
This version sets a fallback list of exchange rate sources.
Exchange rates shall be taken from [Primary Source]. If unavailable, [Secondary Source] shall be used, followed by [Tertiary Source] if necessary.
Internal system rate clause
This version uses an internal company system for currency conversion.
All conversions shall be calculated using the [Party’s Name] internal treasury rate system, updated daily based on market data feeds.
Payment currency adjustment clause
This version allows the recipient to request a different payment currency.
If a currency becomes unstable or unavailable, the recipient may request payment in an alternative agreed-upon currency, using the applicable exchange rate on the request date.
Regulatory exchange rate clause
This version defers to government-mandated rates.
If a government-mandated exchange rate applies to the transaction, that rate shall override any other exchange rate referenced in this agreement.
Currency switch trigger clause
This version allows switching to a different currency under certain conditions.
If the exchange rate fluctuates by more than [X]% over a 30-day period, the parties may agree to switch to a mutually acceptable alternative currency.
Rate lock for milestone payments clause
This version fixes exchange rates for staged payments.
Each milestone payment shall use the exchange rate published on the milestone invoice date, and that rate shall remain fixed for that payment installment.
Exchange rate reporting clause
This version requires rate disclosure in payment notices.
Each payment notice must include the exchange rate used, the source of the rate, and the conversion calculation used to determine the final amount due.
Regional bank rate clause
This version uses a local or regional bank’s published rates.
Currency conversion shall follow the exchange rate published by [named regional bank] on the applicable date of transaction.
Reimbursement conversion clause
This version governs currency exchange for expense reimbursements.
Reimbursable expenses incurred in a different currency shall be converted at the exchange rate on the expense date, unless a pre-agreed per diem or standard rate applies.
Cryptocurrency-linked clause
This version addresses exchange rates when crypto is used.
If payment is made using cryptocurrency, the exchange rate shall be the USD equivalent published by [exchange] at the time the transaction is initiated.
Indexed currency clause
This version pegs the rate to a specific index or basket.
Currency conversion shall be pegged to the [e.g., SDR basket, DXY index] on the date of invoicing, as published by [source].
No adjustment clause
This version states that no adjustments will be made post-payment.
Once payment is made and received, no retroactive adjustment shall be made for differences in exchange rate expectations or movements.
Triggered renegotiation clause
This version calls for renegotiation if rates shift drastically.
If the exchange rate shifts by more than [X]% from the baseline rate, either party may request a good faith renegotiation of affected payment terms.
Escalation clause tied to FX clause
This version ties price increases to exchange rate shifts.
Prices may be increased by [X]% if the exchange rate deviates by more than [Y]% from the rate on the agreement date, subject to prior written notice.
Dual pricing clause
This version provides pricing in two currencies with priority rules.
Pricing may be stated in both [Currency A] and [Currency B], with [Currency A] governing in case of discrepancy unless otherwise agreed.
Floating exchange rate clause
This version allows the rate to adjust in real time.
Currency conversions will be made using the floating exchange rate available at the time the payment is initiated, as published by [source].
FX rate insurance clause
This version allows for using an insurance product to stabilize FX exposure.
The parties may agree to purchase currency insurance or other hedging instruments to reduce risk from future exchange rate fluctuations.
Invoice-specific conversion clause
This version allows different methods per invoice.
Each invoice may specify its own exchange rate method, which shall control for that invoice unless objected to in writing within five business days.
Contingent payment rate clause
This version applies different rates based on payment method.
If payment is made via wire transfer, the rate published on the day of transfer applies. If made via check, the rate on the clearing date shall apply.
Default currency clause
This version sets a fallback currency if conversion becomes impossible.
If conversion between [Currency A] and [Currency B] becomes restricted or unavailable, payments shall default to [Currency C] using the last available published rate.
Banking day conversion clause
This version limits conversion to business days.
Currency conversions shall occur only on banking days. If the relevant date falls on a non-banking day, the rate from the next available banking day shall apply.
Exchange rate floor clause
This version sets a minimum exchange rate to protect one party.
The exchange rate shall not fall below [X.XX] during the term of this agreement. If it does, the parties shall meet to agree on an adjustment or alternative arrangement.
Exchange rate ceiling clause
This version sets a maximum rate to cap payment amounts.
The exchange rate shall not exceed [X.XX]. Any gain beyond this rate shall not be factored into the final payable amount.
Unforeseen market movement clause
This version covers extreme currency volatility.
In the event of extreme currency volatility or a financial crisis impacting conversion rates, the parties agree to consult in good faith to revise payment terms appropriately.
Internal treasury desk rate clause
This version uses a company’s internal FX desk rate.
The exchange rate shall be determined by [Party]’s internal treasury desk, which updates rates daily based on live market data feeds.
Pre-conversion for budgeting clause
This version converts all fees at the start of each quarter.
For budgeting purposes, all amounts will be converted at the start of each quarter using the prevailing exchange rate, and those amounts will be fixed for that quarter’s billing cycle.
This article contains general legal information and does not contain legal advice. Cobrief is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.