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limited liability

n. the maximum amount a person participating in a business can lose or be charged in case of claims against the company or its bankruptcy. A stockholder in a corporation can only lose his/her investment, and a limited partner can only lose his/her investment, but a general partner can be responsible for all the debts of the partnership. Parties to a contract can limit the amount each might owe the other, but cannot contract away the rights of a third party to make a claim.
See also: corporation  limited partnership  liquidated damages  partnership  shareholder 



The People's Law Dictionary by Gerald and Kathleen Hill Publisher Fine Communications