Learn Hardcore Dutch: De uitzondering waarop hij wees staat onderaan het contract. - The exception to which he pointed is at the bottom of the contract.

waarop is a fusion of the relative pronoun waar (“where”) and the preposition op (“on/at”). In Dutch, when you need to refer back to a noun with a preposition, you often combine them into one word: waarop literally means “on which.” Here it refers back to de uitzondering.

Why can’t we just use die or dat as the relative pronoun in this sentence?

You could use die (for de-words) or dat (for het-words) when there’s no preposition in front. But because wijzen requires op, you need a relative pronoun that carries that preposition. You can’t split die and op (i.e. “die hij op wees” is ungrammatical). The standard way is waarop hij wees.

What is the verb wijzen, and why is it conjugated as wees here?

wijzen means “to point (at).” In the simple past tense for hij, Dutch uses wees:

infinitive: wijzen
hij wees (he pointed)

So “hij wees” is simply the past‐tense form.

Why is the preposition op attached to the front of the relative clause, instead of appearing at the end?

Because we’re forming a relative clause that needs to stay compact and keep the verb second. If you try to push op to the end, you’d break the standard Dutch word order and lose the connection to the relative pronoun. Combining preposition + waar (→ waarop) is the correct way to front it.

Could we rephrase the sentence using the separable verb aanwijzen? What would change?

Yes. aanwijzen (“to point out”) absorbs the preposition into the verb, so you can use the normal relative pronoun die. The sentence becomes:
De uitzondering die hij aanwees staat onderaan het contract.

Note: aanwees is the past tense of aanwijzen, and die refers back to de uitzondering.

Why does the sentence use staat instead of ligt for “is located”?

Dutch distinguishes locations with verbs:

staan (to stand) is often used for text or objects “standing” on a surface.
liggen (to lie) is for things lying flat.

When referring to printed text or clauses on a page or contract, you typically say staat: e.g. “Het artikel staat bovenaan pagina 3.”

What does onderaan mean, and how is it different from onder or aan de onderkant (van)?

onderaan = “at the bottom (of).” It’s an adverbial expression.
onder alone means “under/below” and would imply something is beneath the contract, not at its bottom edge.
aan de onderkant van is more wordy but equivalent: “aan de onderkant van het contract.”

How does the word order work here? Why isn’t the verb at the end of the clause?

This is a main (independent) clause. The entire phrase De uitzondering waarop hij wees functions as the subject. Dutch main clauses follow the “verb‐second” rule:
1) Subject (here, the whole relative‐clause phrase)
2) Conjugated verb (staat)
3) Remaining elements (onderaan het contract)

Only in subordinate clauses (with words like dat, omdat, als, etc.) does the verb move to the end.