Exculpatory Clause

AAA

DEFINITION of 'Exculpatory Clause'

A contract provision that relieves one party of liability if damages are caused during the execution of the contract. The party that issues the exculpatory clause is typically the one seeking to be relieved of the potential liability. For example, a venue may print an exculpatory clause on tickets it sells for a concert indicating that it is not responsible for personal injury caused by employees or others during the show.

INVESTOPEDIA EXPLAINS 'Exculpatory Clause'

While exculpatory clauses are typically upheld, they can be challenged and overturned in court. The court can determine that the clause is unreasonable if both parties in the contract do not have equal bargaining power or if the clause eliminates liability for negligence.

RELATED TERMS
  1. Blamestorming

    A fusion of the words "blame" and "brainstorming" which is used ...
  2. Misfeasance

    With regards to performance on a contract, misfeasance is engaging ...
  3. Malfeasance

    Used in regards to performance on a contract, malfeasance is ...
  4. Breach Of Contract

    Violation of any of the agreed-upon terms and conditions of a ...
  5. Failure To Deliver

    An outcome in a transaction where one of the counterparties in ...
  6. Anticipatory Breach

    In contract law, an action that shows a party's intention to ...
Related Articles
  1. Attention Home Buyers! Why You Need ...
    Home & Auto

    Attention Home Buyers! Why You Need ...

  2. How To Pick The Right Lawyer
    Personal Finance

    How To Pick The Right Lawyer

  3. Housing Deals That Fall Through
    Options & Futures

    Housing Deals That Fall Through

  4. Material Adverse Effect A Warning Sign ...
    Markets

    Material Adverse Effect A Warning Sign ...

comments powered by Disqus
Hot Definitions
  1. 80-10-10 Mortgage

    A mortgage transaction in which a first and second mortgage are simultaneously originated. The first position lien has an ...
  2. Passive ETF

    One of two types of exchange-traded funds (ETFs) available for investors. Passive ETFs are index funds that track a specific ...
  3. Walras' Law

    An economics law that suggests that the existence of excess supply in one market must be matched by excess demand in another ...
  4. Market Segmentation

    A marketing term referring to the aggregating of prospective buyers into groups (segments) that have common needs and will ...
  5. Effective Annual Interest Rate

    An investment's annual rate of interest when compounding occurs more often than once a year. Calculated as the following: ...
  6. Debit Spread

    Two options with different market prices that an investor trades on the same underlying security. The higher priced option ...
Trading Center