limited liability

Normally the corporation is an insulator from liability on claims of creditors. The fact that incorporation was desired in order to obtain limited liability does not defeat that purpose. Limited liability is the rule not the exception; and on that assumption large undertakings are rested, vast enterprises are launched, and huge sums of capital attracted.

A principle of modern statutory law whereby those interested in a partnership or joint stock company are held liable only to the extent of their own Interest in the business. See Joint Stock Company; Pabtneuship. The phrase is also used in a less technical and more colloquial sense as applied to restrictions of the liability of certain classes of common carriers, such as steamship, express, or telegraph companies, either by statute or contract. As to the limited liability of vessel owners, see Ship; Vessel; Habteb Act.

The liability of the members of a joint-stock company may be either unlimited or limited; and, if the latter, then the limitation of liability is either the amount, if any, unpaid on the shares, (in which case the limit is said to be "by shares,") or such an amount as the members guaranty in the event of the company being wound up, (in which case the limit is said to be "by guaranty.") Brown.

Defined under Liable in Black's Law Dictionary.