Exculpatory Provision

Definition - What does Exculpatory Provision mean?

An exculpatory provision is a clause in a contract that absolves one party from a liability or prevents that party from being sued. This clause is only recognized by the court if it deems it reasonable and not unconscionable.

Insuranceopedia explains Exculpatory Provision

Although you might not be familiar with the name, chances are you encounter exculpatory provisions almost every day. For instance, when you go into a diner and notice a sign that tells you to take care of your belongings because the establishment is not responsible for their loss, that's an exculpatory provision. In this case, the diner absolves itself from liability for theft or lost items on their premises.

There are, however, some conditions that must be met for such provisions to be enforceable. In the case of the sign, for instance, it would have to be clearly expressed and sufficiently conspicuous. The details of the provision must, moreover, be considered reasonable. A restaurant may, for example, excuse itself of liability for thefts, but it is unlikely that they would be able to have enforce an exculpatory provision that absolves them from liability for food poisoning.

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