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whatanawfulname comments on Harry Potter and the Methods of Rationality discussion thread, part 26, chapter 97 - Less Wrong Discussion
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I don't know why everyone is making this so complicated. Basically, the two words have opposite meanings. In context, "exonerate" means "absolve of", "indemnify" means "secure against". So in the original contract, the clause gets Harry off the hook, while Lucius' suggestion would change the meaning to have Harry still liable. He's just trying his luck because Harry is 11 and might not know big words.
Harry's not on the hook. The wording of the document is "exonerate House Malfoy of any involvement in Hermione Granger's death". Nobody's suggesting Harry should be exonerated of anything; this clause benefits the Malfoys only, and presumably "indemnify" would benefit them more.
Off the hook for the debt, in exchange for the exoneration. Indemnification would just replace Harry's debt with another form of debt.