Exculpatory Clause – Definition

Cite this article as:"Exculpatory Clause – Definition," in The Business Professor, updated September 24, 2019, last accessed October 19, 2020, https://thebusinessprofessor.com/lesson/exculpatory-clause-definition/.

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Exculpatory Clause Definition

An exculpatory clause is an agreement or a provision in a contract that allows a party to be relieved of liability resulting from the execution of a contract. The clause also protects one party to be blamed for damage caused by other parties (his workers or subcontractors), during the execution of a project.

An exculpatory clause often favors that drawer of the clause or the person that drafted an agreement. A good example is a laundryman drafting an exculpatory clause which relieves him of liability resulting from damages caused by the washing machine or iron during the laundry process. Hence, individuals seeking relief from liability for errors that occur during a project draw an exculpatory clause.

A Little More on What is an Exculpatory Clause

Despite that an exculpatory clause is a provision clearly started in a contract, it can be refuted in the court of law. Specifically, an exculpatory clause is an agreement in a contract that states that a party should be relieved from liability or blame for damages that occur during the execution of a project. For instance, a repairer being freed from liability for damages that occur to an item in the course of repair.

Service providers use  exculpatory clauses when dealing with possessions, well-being, personal properties or belongings of clients. Oftentimes, an  exculpatory clause can be challenged in court, especially of a party feels the damage was caused by negligence or lack of expertise in the area. The court authority examines an  exculpatory clause to see if the clause can be upheld or otherwise.

Limitations of Exculpatory Clauses

Despite that parties in a contract uphold an exculpatory clause in many situations, there are specific limitations of an exculpatory clause. One major limitation of the clause is the ambiguity of the language of the clause in such a way not not all parties in a contract understands the clause. Also, an  exculpatory clause is sometimes used for deceit or fraudulent activities by those who draft the clause.

References for “Exculpatory Clause”

https://www.investopedia.com/terms/e/exculpatory-clause.asp

www.businessdictionary.com/definition/exculpatory-clause.html

https://www.thebalancesmb.com › … › Business Law & Taxes › Glossary

https://www.legalmatch.com/law-library/article/exculpatory-clauses.html

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