Grandfather Clauses: Everything You Need To Know

When trying to understand legal documents it is important to know the different types of clauses they can contain. Legal documents can often have complex clauses which may severely impact you without your knowledge. One clause which business owners should be aware of is called a ‘grandfather clause’. Grandfather clauses have the ability change how businesses or even individuals are allowed to operate on daily basis. This article will explain what grandfather clauses are, how they can be applied and what it can mean for your business.

Table of Contents

Definition

A grandfather clause is a portion of a statute, contract or regulation which provides that the legal document does not apply in certain circumstances. This is usually due to specific pre-existing facts. It means that whatever the old rules were prior to the implementation of new rules will continue to apply. The group of people or businesses exempt from new laws or contracts have acquired ‘grandfather rights’. This means businesses can continue to operate as if the laws did not exist. This can be a huge benefit to those businesses. It may even shape competition within industries.

Due to reasons of compromise and practicality provisions such as grandfather clauses exist. Grandfather clauses ensure that new laws put in place do not disrupt existing logistical situations. This also means that businesses are not liable retroactively for certain practices or decisions they made prior. The principle of not being retroactively punished is a recurring legal concept.

Application

Grandfather clauses can be relevant to business owners in a number of contexts. When dealing with employees, contractors or suppliers contracts can contain grandfather clauses which imbue certain rights even if circumstances change or new laws are put into place. Another potential example relates to regulations put in place by governments. There are regular changes to environmental, building, or workplace standards. This has a big impact on businesses and how they operate. However, within the new legislation there may be provisions which allow some businesses to be exempt from newer standards. However, new standards usually do not mean that businesses which are exempt can expand without having to comply to those new standards.

Importantly, just because new regulations or contracts put in place contradict older clauses, it does not mean grandfather clauses apply. For a grandfather clause to exist, there must be a specific provision within the new legal document which allows for an exemption. If there is no provision included grandfather rights cannot be invoked by businesses or individuals.

Sometimes, grandfather clauses have be temporary. This means that businesses are only exempt from new laws for a certain period time. This is because businesses are given time to adjust to new standards and practices. Otherwise it is unfair to implement new laws. In other instances, they are permanent or instituted with limits. The nature of a grandfather clause drastically changes its impact on your business.

Conclusion

Understanding contracts and new laws is critical to ensuring the continued success of your business. Failing to understand the implications of grandfather clauses can have negative consequences. Errors such as this can be common when running a business which must deal with lots of laws, regulations and contracts. In order to avoid such errors when dealing with grandfather clauses, or any other complex legal matters we recommend that you consult one of the lawyers that Lawpath can help you get in contact with.

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