limited liability

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limited liability

n. the maximum amount a person participating in a business can lose or be charged in case of claims against the company or its bankruptcy. A stockholder in a corporation can only lose his/her investment, and a limited partner can only lose his/her investment, but a general partner can be responsible for all the debts of the partnership. Parties to a contract can limit the amount each might owe the other, but cannot contract away the rights of a third party to make a claim. (See: corporation, shareholder, limited partnership, partnership, liquidated damages)

References in periodicals archive ?
Clothing ruling and held that the district court had gotten it wrong in limiting the insured to but one policy limit of liability.
The new UNCTAD/ICC Rules 1991, on the other hand, do set a limit of liability for consequential business losses.
We recognize that many midsized private companies have significant exposures and are sophisticated enough to understand that they need more than one limit of liability to respond to the wide array of suits against them," Salter said.
Enhancements to the coverage include defense costs outside the limit of liability and coverage of the activities of both life insurance agents and registered representatives of sponsors' subsidiary broker/dealers.