Grandfather Clause

A grandfather clause is an exemption that allows persons or entities to continue with activities or operations that were approved before the implementation of new rules, regulations, or laws. Generally speaking, a grandfather clause only exempts people or entities engaged in specified activities before new rules being put in place, while all other parties must abide by the new rules. However, these clauses effectively place two sets of rules or regulations on otherwise similar businesses or circumstances, which can create unfair competitive advantages for grandfathered parties. In these situations, grandfather clauses may only be granted for a set period.