In accounting, a financial liability is something that is owed to another party. This is typically contrasted with an asset which is something of value that you own. The basic accounting equation relates assets, liability, and capital (or equity) thus:
liabilities + equity = assets
where assets are what you own, liabilities are what you owe to others, and equity is what you have contributed to the venture.
Examples of types of liabilities include: money owing on a loan, money owing on a mortgage, or an IOU.
In law a legal liability is a term used to describe situations in which a person is liable, for, say, damage to property and is therefore responsible to pay compensation for any damage incurred; liability may be civil or criminal.
In commercial law, limited liability is a form of business ownership in which business owners are legally responsible for no more than the amount that they have contributed to a venture. If for example, a business goes bankrupt an owner with limited liability will not lose unrelated assets such as a personal residence (assuming they do not give personal guarantees). For an explanation see business entity.
An example (from both accounting and law)
Money that you have accumulated is an asset to you. It is something of value that you own. If you take your money to a bank and deposit it there, it becomes a liability to the bank (the bank owes you the money). The money is both an asset to you and a liability to the bank.
Alternatively if, when you take the money to the bank, you store it in a safety deposit box rather than deposit it into an account, the bank has a legal liability (under bailment law) to ensure that your asset is not damaged while it is under their care..
In addition, under the concept of "vicariously liability," a person may be liable for the infringing actions of another if the person has the right and ability to control the infringer's acts and receives a direct financial benefit from the infringement.
However, the Court found that Netcom may be liable to the Church under the theory of contributory infringement by materially contributing to the infringement of the user.
Although the case was settled by the parties and Prodigy moved for a withdrawal of the judge's decision, the judge refused.
The common law rule of joint and several liability, sometimes called the "deep pocket" rule, makes each and every defendant in a tort lawsuit liable for the entire amount of the plaintiff's damages regardless of the defendants' relative degrees of fault or responsibility.
The application of the doctrine of joint and several liability poses a particularly serious problem for professionals whose clients have become bankrupt or are otherwise "judgment proof." For example, many lawsuits that involve professionals are brought by shareholders or creditors of a bankrupt client.
Limited joint and several (except in products liability actions and actions involving a blame-free plaintiff) holds defendants severally liable except when uncollectible shares of a judgment are reallocated between solvent co-defendants according to their degree of negligence, joint and several liability is abolished for municipalities.
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