1. In business, liability is used to refer to how financially liable you are for the actions of a company if it becomes insolvent. In the case of a sole trader, his personal possessions are at risk when it comes to paying debts. This is called unlimited liability.

One of the advantages of been a plc or ltd however, is limited liability. Shareholders in a large company are only liable for the capital they invested, and nothing else. The company is a seperate legal entity to the owners, and the debts of one are not the debts of the other.

2. Common usage: "You're a liability," meaning "You cause numerous problems."

Li`a*bil"i*ty (?), n.; pl. Liabilities ().

1.

The state of being liable; as, the liability of an insurer; liability to accidents; liability to the law.

2.

That which one is under obligation to pay, or for which one is liable.

Specifically, in the pl.,

the sum of one's pecuniary obligations; -- opposed to assets.

Limited liability. See Limited company, under Limited.

 

© Webster 1913.

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