Request for increase: Overview, definition, and example
What is a request for increase?
A request for increase refers to a formal request made by a party—such as a borrower, contractor, or service provider—to raise an agreed-upon limit, amount, or obligation within a contract. This can apply to financial agreements, pricing adjustments, credit limits, or project budgets. The request typically requires justification and approval from the other party before taking effect.
For example, a business with a credit line may submit a request for increase to its bank, asking to raise its credit limit to accommodate growing operational expenses.
Why is a request for increase important?
A request for increase is important because it provides a structured way to modify contract terms without breaching the original agreement. It ensures that both parties formally agree to changes, reducing misunderstandings and legal disputes.
For businesses, a request for increase can allow flexibility in financing, project scope, or service levels. Lenders, suppliers, and clients often require documentation and justification before approving an increase, ensuring that the change aligns with financial or operational capabilities.
Understanding a request for increase through an example
Imagine a company has a $500,000 credit line with its bank. Due to expansion, the company needs more working capital and submits a request for increase to raise the credit limit to $750,000. The bank reviews the company’s financials and, upon approval, amends the credit agreement accordingly.
In another example, a construction contractor is working on a large project and encounters unexpected material cost increases. The contractor submits a request for increase to the project owner, asking for an additional $50,000 to cover the rising costs. The owner evaluates the request and, if approved, adjusts the project budget.
An example of a request for increase clause
Here’s how a request for increase clause might appear in a contract:
“The Borrower may submit a written request for an increase in the credit limit, subject to Lender’s review and approval. Any approved increase shall be documented in an amendment to this Agreement.”
Conclusion
A request for increase allows parties to formally seek adjustments to financial limits, project budgets, or contractual obligations. It provides a structured process for making changes while ensuring transparency and mutual agreement. Businesses should understand how to structure and justify such requests to improve the chances of approval and maintain good relationships with lenders, clients, or stakeholders.
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.