Smart Consumers : Understand Exoneration Clauses

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• July 30, 2025

Smart Consumers: Understand Exoneration Clauses

Have you ever encountered terms such as “Goods purchased are non-returnable” or “Customers shall be bound by the terms and any amendments unilaterally made by the bank” when purchasing goods or utilizing services? These clauses are often printed in small fonts, making them difficult to read. Such provisions clearly prejudice the buyer as the consumer, because the business actor (the seller or service provider) attempts to disclaim or transfer their liability to the consumer. These provisions are known as exoneration clauses.

Definition of Exoneration Clause

The term exoneration is derived from the English words “exoneration” or “exemption,” referring to a release or exception from legal obligation or liability. An exoneration clause is defined as a contractual stipulation that excludes or limits liability. As part of a standard-form contract prepared in advance by the seller or service provider (business actor), these clauses serve to protect the interests of the business actor by transferring their obligations or liabilities to the consumer or third party. As a consequence, consumers are vulnerable to unfair disadvantage.

Characteristics of Exoneration Clauses

Exoneration clauses form part of adhesion contracts, which are standardized agreements typically issued in pre-printed form and intended for use with a large number of parties. These agreements are unilaterally prepared by the stronger party (typically the business actor), while the weaker party (the consumer) may only accept or reject the terms in full, without the ability to negotiate.

According to Abdul Kadir Muhammad in his book Standard Contracts in the Practice of Trade Companies, the characteristics of standard-form agreements include:

1. The agreement is in written form;
2. The contractual format is standardized;
3. The terms and conditions are determined solely by the business actor;
4. The consumer has only the option to accept or reject the agreement;
5. Dispute resolution is to be conducted via amicable settlement or judicial proceedings;
6. The standard agreement is structured to benefit the business actor.

Prohibition of Exoneration Clauses

Law Number 8 of 1999 concerning Consumer Protection (hereinafter referred to as the “Consumer Protection Act”) does not expressly define “exoneration clauses.” Nevertheless, Article 18 paragraph (1) of the Act explicitly prohibits business actors from incorporating standard clauses into any document and/or agreement that contain the following provisions:

1. A clause that transfers the liability of the business actor;
2. A clause granting the business actor the right to refuse the return of goods purchased by the consumer;
3. A clause granting the business actor the right to deny the return of funds paid for goods and/or services acquired by the consumer;
4. A clause enabling the business actor, either directly or indirectly, to take unilateral actions regarding goods purchased by the consumer on an installment basis;
5. A clause regulating the burden of proof for the loss of utility of goods or services purchased by the consumer;
6. A clause imposing on the consumer the burden of proof regarding the deficiency or ineffectiveness of goods or services;
7. A clause granting the business actor the right to diminish service benefits or to reduce the consumer’s property;
8. A clause declaring that the consumer is subject to new, additional, extended, or amended rules unilaterally enacted by the business actor during the period in which the consumer utilizes the services acquired;
9. A clause stipulating that the consumer grants power of attorney to the business actor to encumber the goods purchased on credit with a mortgage, pledge, or other form of security interest.

Conclusion

Business actors are prohibited from including exculpatory clauses in the offering of goods and services. If such exculpatory clauses are present, consumers shall not be bound to comply with them, as they are contrary to statutory provisions.

Legal Basis:

• Civil Code of Indonesia ;
• Law of the Republic of Indonesia Number 8 of 1999 concerning Consumer Protection

Authors :

Gracia, S.H

Evi Mutiara

Editor :

Muhammad Arief Ramadhan, S.H.