Tuesday, April 27, 2010


When something gradually increases in size—for example, your spouse’s waistline or your boss’s ego—the process is known as accretion. Accretion also appears in contracts, such as:

  • Financial contracts. Accretion refers to the process by which payments or value increase over time. For example, accretion occurs when a bond purchased at a discounted price ($175) matures to its face (or “par”) value ($250).
  • Real estate contracts. Accretion refers to the increase in land size due to the forces of nature. For example, accretion occurs if a river changes course and sediment deposits increase the size of the property.
  • Labor union contracts. An accretion clause dictates what happens to employees in one company if they are transferred to another company whose employees are already represented by a union.

An accretion clause spells out how the extra money, property, or people will be treated (for example, who will own the land created by sedimentation).

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