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Contract & Commercial Law vocabulary · Breach & Remedies

Liability

Meaning in contract & commercial law, with examples

/ˌlaɪəˈbɪləti/nounCore term

In contract & commercial law, liability means: Legal responsibility for something, especially the duty to pay compensation for loss or harm; in accounting, also a debt that a business owes.

In Turkish: sorumluluk, hukuki sorumluluk, borç

How it is used

Central to how contracts share risk: parties accept, limit, exclude or cap liability. The adjective form is 'be liable for': 'The seller is liable for defects.' Lawyers distinguish contractual liability from liability in tort, such as negligence.

Example sentences

  1. The supplier's total liability under this agreement shall not exceed the fees paid in the previous 12 months.

  2. The company denied liability for the damage to the shipment.

Common collocations

  • limit liability
  • exclude liability
  • accept liability
  • deny liability
  • liability cap
  • limitation of liabilityA contract clause that caps or restricts the amount or the types of loss a party must pay for if something goes wrong.
  • indemnityA promise by one party to cover specific losses or costs that the other party suffers, for example claims brought against it by third parties.
  • damagesMoney that a court or tribunal orders one party to pay another as compensation for loss caused by a breach of contract or another legal wrong.
  • limited liability companyA company whose owners are responsible for its debts only up to the amount they have invested, so their personal assets are protected.

This word in other fields

The same English word can have a different meaning in another field:

More terms: Breach & Remedies

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This page explains English vocabulary for learners. It is not legal advice.