The term liability refers to a broad spectrum of things a person may be held responsible for. This may be a legal liability, a financial liability, or other responsibility. An example of liability includes the legal obligation to pay a debt, or to pay for damages an individual has caused someone else. Liabilities are also counted in finances as debits on the ledger. To explore this concept, consider the following liability definition.

Definition of Liability


  1. The state of being liable, or responsible, for something
  2. An obligation, debt, or responsibility
  3. Something that serves as a hindrance or disadvantage

Origin of Liable (base word)

1535-1545        Anglo-French  lier   (to bind)

What is Liability

Public liability deals specifically with civil issues in which one person has been injured, or otherwise wronged, by someone else. Examples of liability claims that fall under the public liability umbrella include such things as:

  • Automobile accidents (both physical injuries and property damage)
  • Slips, trips, and falls (these make up a majority of the public liability claims that are filed)
  • Stress- and anxiety-related illnesses (caused by someone’s wrongdoing)
  • Falling objects (i.e. striking against something, or being struck by an object)

In a public liability matter, an injured party may hold the person or entity that caused him harm liable for their actions. To win such a lawsuit, the plaintiff (injured party) must prove that the other party (the defendant) did something that directly caused his damages. Such actions do not need to be intentional, in fact, intentional acts that cause harm may carry a harsher penalty. Many civil liability lawsuits come of damages caused by negligence, or by simply accident.

Civil Liability

Civil liability refers to the right of an injured party to hold someone responsible for his injuries or damages, which resulted from the other party’s wrongful actions. In order to hold a person or entity civilly liable, the wronged party must have suffered some type of quantifiable loss or damage. This may be in the form of personal injury, property damage, loss of income, loss of contract, and a host of other losses.

In a civil liability lawsuit, the injured party’s losses must have occurred due to the defendant’s violation of a law, breach of contract, or other wrongful act, referred to as a “tort.” Examples of civil liability cases include injuries and property damages sustained in automobile accidents, and defamation of character claims. To be successful in a civil liability lawsuit, the plaintiff must prove to the court, or to a jury, that it is more likely than not that the defendant’s actions caused his injuries or loss. This level of proof required is referred to as a “preponderance of evidence.”

Breach of Contract Liability

In a breach of contract case, the plaintiff must be able to prove that the defendant failed to meet his obligations as defined in the contract. For example, a builder who is hired to build a shed in a family’s backyard, then fails to complete it, has breached the contract he entered into with the family.

The goal of the court in any breach of contract case is to make the injured party whole. This may include canceling the contract, and ordering the party that breached the contract to return whatever money or other thing the plaintiff had paid. The more complex and costly the contract, the more difficult the burden of determining breach of contract liability for the court.

Difference Between Civil Liability and Criminal Liability

The difference between civil and criminal liability lie in the actual actions of the wrongdoing party. While many acts are capable of causing harm, injury, or damages, they are not necessarily criminal acts. A person who does something that is illegal, causing harm to someone, may face prosecution for criminal charges. That does not absolve that person from being held civilly liable, and potentially being ordered to pay for the damages his actions caused. On the other hand, someone who causes damages, but does not break the law, cannot be criminally charged, but is still civilly liable.

Example of Civil Liability vs. Criminal Liability

Amelia is driving home after picking her two children up from school, when a pickup truck loses control on the wet street, and slams into Amelia’s car. Amelia was driving safely for the weather conditions, and it was Travis, the pickup truck driver, who lost control of his vehicle. Even though it was likely accidental, Travis holds civil liability to pay for Amelia’s damages – both to her car, and to any of its passengers.

If, in the same accident, the police discover that Travis was driving under the influence of alcohol, things are different. Travis holds criminal liability for DUI, but he can also be held civilly liable to pay for Amelia’s damages.

Criminal Liability

Criminal liability occurs when someone has acted with criminal intent – or when he has intentionally engaged in an act that is illegal. The process of charging someone with a crime, putting him on trial, convicting him of that crime, and handing down a sentence or punishment, is to hold that person criminally liable. This is true of crimes that range in severity from misdemeanors, to serious felonies.

In keeping with the basic definition of liability – an obligation, debt, or responsibility – came the phrase that someone must “pay his debt to society.” Crimes literally cost someone something, whether that something is money, property, or even a life, and a criminal must be held responsible to “pay” for that loss through fines, imprisonment, restitution, or other means.

A defendant may be found guilty of a crime in a criminal liability case if the prosecution can prove two things:

  1. The defendant did, in fact, commit the criminal act; and
  2. He intended to commit the crime

Intent is a critical element in criminal liability. For instance, a person accused of theft from a store must have intentionally taken the item. This differs from a civil liability case, in which criminal intent is not a factor. In fact, someone can be held civilly liable when their actions were accidental.

Another important element in criminal liability is competency, which is whether or not the person engaging in a criminal act was mentally able to understand his actions, or to be capable of forming an intent to commit the crime. This is often the case in matters involving minors or those who are mentally incapacitated.

Liability Waiver

A liability waiver is a legal document that someone may sign acknowledging that he understands the risks involved in participating in a certain activity. Liability waivers are commonly used in potentially dangerous activities like sky diving, bungee jumping, and even summer camp.

Once a liability waiver has been executed, the company hosting the activity is released of legal liability should something go wrong. The theory behind liability waivers is that the person acknowledges having been told the activity could be dangerous, and could result in injury, or even death – and then chosen to participate anyway.

Example of Liability Waiver

Sara and Joanne decide to take skydiving lessons. The two 19-year old college students go to the Hi-Fly skydiving company, which teaches people how to skydive, and offers skydiving adventures for experienced divers. Before the first class, Sara and Joanne are given paperwork to complete, which includes a liability waiver. The document identifies skydiving as a potentially dangerous sport, and goes on to list some of the ways in which people can be injured or killed should something go wrong. The waiver absolves the company from any liability should this happen. Eager to get on with their first lesson, the girls complete all the forms, and sign the liability waiver.

The lessons progress, and on the day of Sara’s and Joanne’s first solo dive, the person packing the parachutes misses a frayed cord. As Sara pulls her cord, it breaks, and the chute opens partially, then tangles with the backup chute. Sara falls from the sky, her instructor grabbing her a dozen yards from the ground, aiding her landing. Sara breaks both legs and her pelvis, and dislocates her shoulder.

Sara is angry and scared, and is facing potentially hundreds of thousands of dollars in medical bills. She files a civil lawsuit against the Hi-Fly skydiving company, claiming it is their fault her chute didn’t open properly, and therefore for her injuries. While the company may attempt to simply brandish the liability waiver with Sara’s signature on it, it is unlikely it will be taken at face value to excuse the company from all liability.

Liability waivers became popular late in the 20th century, but the enforceability has been challenged many times since. In many cases whether or not such an agreement can be enforced in court depends on the specific language in the agreement, as well as the specific details of the case. This is because the courts have held that reckless, grossly negligent, and intentional behaviors cannot simply be ignored because someone signed a waiver.

Limited Liability

Limited liability is a business and financial term, which refers to an owner’s or investor’s limited personal responsibility for the business’s debts and other obligations. If a lawsuit is filed against a limited liability company, the claimants are suing the company as a whole, not the company’s individual owners or investors. In such a case, the owners and investors would only stand to lose the amount they had put into the company to begin with. The plaintiff could not, in most cases, sue them personally, or go after their personal assets.

Limited liability is the opposite of a sole proprietorship, or a general partnership, as, in both of these business models, the company’s owners are liable for all of the company’s debts and obligations. Should a lawsuit be filed against this type of company, the owners may be held fully liable, and should a judgement be rendered that exceeds the assets of the company in this example of liability, the owners stand to lose their personal assets as well.

General Liability

General liability involves claims of bodily injury, costs associated with said bodily injury, and/or potential damage to an individual’s property, due to a business’ actions. The potential financial liability to any company should one of these claims be successful can spell disaster. Because of this, businesses are encouraged to purchase general liability insurance.

Examples of liability that fall under the general liability umbrella include:

  • Bodily injury – covers injuries sustained by a customer while on the company’s property, or as a result of the company’s actions.
  • Property damage – covers damages caused to someone’s property by the company’s actions, such as if the company’s delivery truck backs into a customer’s garage door.
  • Defamation claims – covers the company for claims that it defamed the character of another person or business, and may cover such things as copyright and trademark infringement.
  • Counsel fees – in addition to the award of damages on the main complaint, a company may be ordered to pay the plaintiff’s attorney’s fees.

Product Liability Example in Lawsuit over Hot Coffee

Product liability is a type of liability in which companies that manufacture and supply products may be held responsible for injuries or damages caused by their products. In 1992, 79-year-old Stella Liebeck went through a McDonald’s drive-thru with her grandson driving, and ordered a cup of coffee. She had him park for a moment so she could add cream and sugar to her cup, holding it between her knees to do so. The coffee spilled over her lap in the process. Stella was wearing sweatpants, which quickly absorbed the very hot coffee, holding it against her skin.

Stella was taken to a hospital, where it was determined that she had second- and third-degree burns over her thighs, groin, and buttocks. Her injuries were so severe, she had to have skin grafts during the course of an eight-day hospital stay, then required care in her home for weeks afterward, which was provided by her daughter. Stella was disabled for two years following the incident, and was permanently disfigured. Stella filed a civil lawsuit against McDonald’s, seeking only about $2,000 for her out-of-pocket expenses, plus her daughter’s lost wages.

McDonald’s offered her an insulting $800, so she hired an attorney, who immediately amended her lawsuit complaint, asking for a great deal more money – for her injuries, medical expenses, and pain and suffering. The crux of the complaint was that the coffee was “defective,” in that it was excessively hot. The case was based on the theories of product liability, and strict liability. Stella’s attorney offered to settle the lawsuit for $20,000, but McDonald’s refused.

At trial, Stella’s attorney presented evidence that McDonald’s required its stores to maintain their coffee at 180 – 190 degrees Fahrenheit, and that knew it was too hot, as it had received hundreds of complaints prior to Stella’s case. He presented expert witnesses to testify that, at 190 degrees F, the coffee would cause third degree burns in just 2 to 7 seconds. At 160 degrees F – a temperature at which many establishments serve their coffee – that time would be increased to about 20 seconds – enough time to strip away clothing that might hold it next to the body. McDonald’s argued that Stella’s injuries were here own fault.

The jury decided that McDonald’s was 80 percent at fault for Stella’s injuries, attributing the other 20 percent of fault to Stella herself. The jury awarded Stella $200,000 in compensatory damages, and $2.7 million in punitive damages. The judge, however, reduced the punitive damage award to $480,000. Both parties appealed – McDonald’s seeking to overturn the verdict, and Stella to enforce the entire award. The parties reached a settlement before the appeal was heard, for an undisclosed amount thought to be somewhere under $600,000.

Related Legal Terms and Issues

  • Preponderance of Evidence – the more convincing evidence in a case, insofar as its legitimacy and/or accuracy, that ultimately helps the jury decide for one side over the other in a trial.
  • Tort – a wrongful act that leads to the opening of a civil liability case.