Legal Liability Definition

The "Legal-Ease" Glossary
Legal Liability

This refers to the responsibility to pay debts, which is a part of both criminal and civil law.

If you are found "legally liable," that means you are legally and financially responsible for something. Some legal liabilities are protected by insurance (see: liability insurance), but that doesn't mean a small-business owner can find insurance to cover everything. Intentional wrongs (like crimes), for example, are generally excluded from insurance coverage.

If your business is sued over an accident or injury and the case has legal standing, it’s up to the judge to determine whether you were negligent. If you are found guilty of negligence, you are liable for the damages the other party suffered.

Because of a business’s relationship with the public, there are some instances where legal liability is pretty straightforward. For example, if you own a restaurant that’s open to the public, you have a duty to make your commercial space safe for customers. That means your sidewalks should be shoveled and salted in the winter and that your steps should have rails to help people safely enter and exit the building. Your walkways should be clear of clutter to reduce the risk of trips and falls. If you don’t meet these expectations, you can be liable if someone is injured on your property.

Here are some other examples of liability and its legal labyrinths:

  • If the injured person was somewhere they shouldn’t have been, you may not have a "duty" to the injured person.
  • If a person’s carelessness contributed to their injury, you may be only partially liable for the accident.
  • If your employee’s negligence causes someone harm, your business can be legally liable for the incident.
  • If you sell or manufacture a defective product that causes someone harm, you can be liable for the injury.

For more on legal liability, see our blog post "Yes, It's Your Fault: The Scary Truth of Legal Liability."

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