Which term describes a contract clause that releases one party from liability?

Which term describes a contract clause that releases one party from liability?

• A. exculpatory clause
• B. due diligence
• C. professional negligence
• D. lien waiver

Answer: (A)

An exculpatory clause is a contract provision that releases one party from liability for certain risks or harms. It’s the mechanism used to shift risk and protect a party from claims, often appearing in waivers or releases. This makes it the best fit for a term describing a clause that releases liability. By contrast, due diligence is the process of investigating facts before entering a deal; professional negligence refers to failing to meet the expected standard of care, which typically gives rise to claims rather than waivers; and a lien waiver is a document in which a party relinquishes a lien on property, not a broad release of liability. Keep in mind that exculpatory clauses can be limited by law and public policy, and may not be enforceable in cases of gross negligence or intentional wrongdoing.

An exculpatory clause is a contract provision that releases one party from liability for certain risks or harms. It’s the mechanism used to shift risk and protect a party from claims, often appearing in waivers or releases. This makes it the best fit for a term describing a clause that releases liability.

By contrast, due diligence is the process of investigating facts before entering a deal; professional negligence refers to failing to meet the expected standard of care, which typically gives rise to claims rather than waivers; and a lien waiver is a document in which a party relinquishes a lien on property, not a broad release of liability.

Keep in mind that exculpatory clauses can be limited by law and public policy, and may not be enforceable in cases of gross negligence or intentional wrongdoing.