Liability

Liability refers to the legal responsibility of an individual or entity to settle debts or obligations that arise from past transactions or events. This can encompass various forms of financial obligations, including loans, contracts, and torts.

Liabilities can be classified into two main categories:

• Current Liabilities: These are obligations expected to be settled within one year. Examples include accounts payable, short-term loans, and accrued expenses.
• Long-Term Liabilities: These are obligations that extend beyond one year. Examples include mortgages, long-term loans, and Bonds payable.

In legal contexts, liabilities can also refer to the responsibility one has to compensate for harm or damages caused to another party. This can arise from contracts or negligence. For instance, if a business fails to fulfill a contract, it may be liable for any resulting losses suffered by the other party.

Notable cases include:

• Palsgraf v. Long Island Railroad Co. (1928): This case established principles of liability in tort law, focusing on foreseeability and proximate cause.
• Caparo Industries plc v. Dickman (1990): This case clarified the criteria for establishing duty of care, a key aspect of liability in negligence claims.