What Is Exculpatory Clause?

Provision in a contract under which (1) one party is relieved of any blame or liability arising from the other party's wrongdoing, or (2) one party (usually the one which drafted the agreement) is freed of all liability arising out of performance of that contract. For example, a dry cleaner's receipt that includes a disclaimer freeing him or her from any liability for damage to the item to be cleaned during the dry cleaning process. An exculpatory clause may be overruled by courts if found to be unreasonable in the circumstances. See also exclusion clause, exemption clause, and indemnity clause.