Legal liability definition
/What is Legal Liability?
A legal liability is a commitment imposed on a party as the result of a contract or civil action. A legal liability may be covered by insurance. It may also be voided by the legal structure of a business; thus, the legal liabilities of a corporation do not extend to its shareholders.
Examples of Legal Liability
For example, being the party to a contract to provide services to a customer imposes a legal liability on the seller to provide those services. Or, a court finds that a firm has a legal liability as the result of a lawsuit brought by a customer, due to a broken product that damaged the property of the customer.