A loophole is using the letter of the law on something to get around things. For instance, lets say the law said "no one but those wearing blue may enter the building" but a lawyer could argue that someone wearing teal should still be able to enter because it does take blue and green mixes to make teal. The loop hole being that blue was not defined to a particular shade and to enough detail that someone can work around it. Loopholes are 'holes' in the details that can be worked to the advantage of someone who does not want to stick to the contract or legal side of things. They can always claim "well, it said this but not that" so...it does not count. They get away with it a lot in business.