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Legal Dictionary

contingent liability

Legal Definition of contingent liability

Related terms


Definition of contingent liability

Further reading

Contingent liabilities are liabilities that may or may not be incurred by an entity depending on the outcome of a future event such as a court case. These liabilities are recorded in a company's accounts and shown in the balance sheet when both probable and reasonably estimable. A footnote to the balance sheet describes the nature and extent of the contingent liabilities. The likelihood of loss is described as probable, reasonably possible, or remote. The ability to estimate a loss is described as known, reasonably estimable, or not reasonably estimable.

Examples

  • Outstanding lawsuits
  • Legal liability
  • Liquidated damages
  • Tort
  • Bills Discounted with bank
  • Unliquidated damages
  • Destruction by Flood
  • Product warranty
  • Income Tax Disputed
  • Sales Tax Disputed

References:

  1. Wiktionary. Published under the Creative Commons Attribution/Share-Alike License.



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