grandfathering

Grandfather Clause

A clause in a new law, regulation, or anything else that exempts certain persons or businesses from abiding by it. For example, suppose a country passes a law stating that it is illegal to own a cat. A grandfather clause would allow persons who already own cats to continue to keep them, but would prevent people who do not own cats from buying them. Grandfather clauses are controversial, but they are also relatively common.

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grandfathering

An alteration of the rules that apply to a certain investment or investment technique while stipulating that investment actions taken before a certain date remain subject to the old rules. For example, Congress may change the law by stipulating that certain types of municipal bonds no longer pay tax-free interest while at the same time grandfathering the municipal bonds issued before the date on which the new law is to take effect.

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grandfathering

An expression used to describe a statutory or contractual willingness to allow some activities or former rights to continue even though not technically allowed under current conditions. For example, downtown zoning regulations no longer allow gas stations in the area, but Fred's Fuel was doing business before the zoning laws went into effect,so it is grandfathered and can stay in business.