NOUN (2)

1. an ambiguity (especially one in the text of a law or contract) that makes it possible to evade a difficulty or obligation;

2. a small hole in a fortified wall; for observation or discharging weapons;

The Collaborative International Dictionary of English v.0.48:

Loophole \Loop"hole`\, n.
   1. (Mil.) A small opening, as in the walls of fortification,
      or in the bulkhead of a ship, through which small arms or
      other weapons may be discharged at an enemy.
      [1913 Webster]

   2. A hole or aperture that gives a passage, or the means of
      escape or evasion.
      [1913 Webster]

   3. An amibiguity or unintended omission in a law, rule,
      regulation, or contract which allows a party to circumvent
      the intent of the text and avoid its obligations under
      certain circumstances. -- used usually in a negative
      sense; -- distinguished from escape clause in that the
      latter usually is included to deliberately allow evasion
      of obligation under certain specified and foreseen
      circumstances; as, a loophole in the law big enough to
      drive a truck through.
      [PJC]

WordNet (r) 3.0 (2006):

loophole
    n 1: an ambiguity (especially one in the text of a law or
         contract) that makes it possible to evade a difficulty or
         obligation
    2: a small hole in a fortified wall; for observation or
       discharging weapons