limited liability

noun

Updated on: 15 Apr 2018

Definition of limited liability

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

Recent Examples of limited liability from the Web

TNHC Mountain Shadows LLC, a Delaware limited liability company, sold the home.

— azcentral, "Luxury homes: $2.75M Phoenix mansion has kids wing, guest quarters," 9 Apr. 2018
Instead, it is owned by a limited liability company that is in turn owned in part by Hart’s wife Vicki.

— justin worland, Time, "The EPA Head's Controversial Room Rental Is Not His Only Tie to Natural Gas," 30 Mar. 2018
Records show Weinstein purchased the property through the limited liability company Thirban Realty Holdings in 2006 for $14.95 million.

— jack flemming, latimes.com, "Harvey Weinstein's Manhattan town house quietly sells for $25.6 million," 29 Mar. 2018
TNHC Mountain Shadows LLC, a Delaware limited liability company, sold the condo. Researched by Lorraine Longhi and The Information Market.

— lorraine longhi, azcentral, "Luxury homes: $3.2M Mesa mansion has NBA-style basketball court, eight-car garage," 26 Mar. 2018
The two limited liability companies are under the control of O’Neill Properties.

— frank kummer, Philly.com, "EPA settlement at Upper Merion Superfund site could make way for new apartments," 26 Mar. 2018
According to the Florida Department of State, Edmund Irvine is the managing member of that limited liability company.

— robyn a. friedman, Sun-Sentinel.com, "Miami Beach home built by former Formula 1 racer hits the market for $29.5 million," 19 Mar. 2018
New documents obtained by CNN on Wednesday suggested another Trump attorney besides Cohen was involved in establishing the limited liability company used to pay Daniels.

— eli watkins, CNN, "Stormy Daniels' mother on Trump: 'I would vote for him every time'," 15 Mar. 2018
With Quinn gone and much of the home's furniture sold off in an estate sale last November, the new owners (who shielded their identities by purchasing through a limited liability company) are taking steps to make the home their own.

— sam dangremond, Town & Country, "The Grey Gardens Renovation Is Underway—and People Aren't Happy About It," 14 Mar. 2018

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.

First Known Use of limited liability

1848

Financial Definition of LIMITED LIABILITY

limited liability

noun

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