Etymology
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loophole (n.)

also loop-hole, mid-15c., from hole (n.). + Middle English loupe "narrow window, slit-opening in a wall" for protection of archers while shooting, or for light and ventilation (c. 1300), which, along with Medieval Latin loupa, lobia probably is a specialized word from a continental Germanic source, such as Middle Dutch lupen "to watch, peer." Figurative sense of "outlet, means of escape" is from 1660s.

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Definitions of loophole

loophole (n.)
an ambiguity (especially one in the text of a law or contract) that makes it possible to evade a difficulty or obligation;
loophole (n.)
a small hole in a fortified wall; for observation or discharging weapons;
From wordnet.princeton.edu