Exclusion Clause Law and Legal Definition

Exclusion clause is a type of exemption clause used in contracts. Exclusion clause excludes or excuses one party’s liability completely for specified outcomes. Situations that are excluded in exclusion clauses are called exclusions. It restricts the rights of the parties to a contract.

A party relying on exclusion clause is to draft it properly so that it exempts the parties from the liability arising there from. In case of ambiguity in terms, the courts usually interpret the provision strictly against the party relying on the clause.