limited liability

noun

Definition of limited liability

: liability (as of a stockholder or shipowner) limited by statute or treaty

Examples of limited liability in a Sentence

Recent Examples on the Web

Adav Noti, a former Federal Election Commission attorney, said the use of limited liability companies such as these is a growing problem. Washington Post, "Biden taps influence industry despite pledge on lobbyists," 3 Sep. 2019 Although Thrive was a public school, its building is privately owned by a limited liability company affiliated with Thrive and essentially run by the Thrive Education Foundation. Kristen Taketa, San Diego Union-Tribune, "Effort to bring Thrive charter families back to their school building falls through," 2 Sep. 2019 Three years ago, Dickens transferred ownership to a limited liability company controlled by his partner on the project, Victor Franco Noval. Jack Flemming, Los Angeles Times, "Once listed for $1 billion. Sold for $100,000. What just happened?," 20 Aug. 2019 According to the New York Times, Maxwell's residence was purchased for $4.95 million by an anonymous limited liability company with an address that matches the office of J. Epstein & Co.; the house was sold in 2016. Ben Widdicombe, Town & Country, "After Jeffrey Epstein's Death, What Happens to Ghislaine Maxwell?," 13 Aug. 2019 Shearer and the doctor are business partners who co-own the building through a limited liability company, according to state records and the doctor's lawyer. Anchorage Daily News, "Just 15% of U.S. pharmacies distributed nearly half of prescription opioid pain pills," 12 Aug. 2019 The Wall Street Journal first reported LaPierre’s housing plan, and attributed to an anonymous source a description of a $70,000 transfer of cash from the NRA to an unnamed limited liability company affiliated with Ackerman. Mike Spies, ProPublica, "Document Shows NRA Money Helped Its Chief Search for a Personal Mansion," 8 Aug. 2019 After Luxenberg left Vinci, Farina formed a new limited liability company, Blue Edge Strategies. Jesse Leavenworth, courant.com, "Lawsuit: State representative, former co-owner of Manchester political consulting firm, says partner owes him over $150,000," 6 Aug. 2019 Most of the 41 spas raided were run through limited liability corporations, which provide a layer of anonymity to business owners. USA Today, "Sex trafficking is behind the lucrative illicit massage business. Why police can't stop it.," 30 July 2019

These example sentences are selected automatically from various online news sources to reflect current usage of the word 'limited liability.' Views expressed in the examples do not represent the opinion of Merriam-Webster or its editors. Send us feedback.

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First Known Use of limited liability

1848, in the meaning defined above

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Last Updated

15 Sep 2019

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The first known use of limited liability was in 1848

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More Definitions for limited liability

limited liability

noun

Financial Definition of limited liability

What It Is

Limited liability is limited exposure to financial risk by investors of a company or a partnership. This exposure is usually limited to the individual's investment.

How It Works

In certain cases where an investor invests his money with a company or partnership, this investor will not be liable for any financial risk beyond what he has invested in the business entity. These types of entities are normally limited liability partnership arrangements and limited liability companies.

For example, if an investor enters into an agreement to join a LLC, his investment of $100,000 is his total liability. In other words, he can potentially lose all of this and no more. He won't be liable for any liability beyond this initial $100,000. If he were to invest additional sums, this limited liability would then match his total contribution.

Sole proprietorships and general partners in general partnerships, on the other hand, have unlimited liability.

Why It Matters

This concept of limited liability enters into the decision making equation of businesses and investors when forming a business entity, otherwise known as choice of entity. Depending on the risks and investments of all the participants, the decision may be made to organize a business with limited liability due to many factors, including but not limited to, taxes, dividends, risk, duration, profession and control.

Source: Investing Answers

More from Merriam-Webster on limited liability

Britannica.com: Encyclopedia article about limited liability

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