A legal concept in which an individual's financial liability is limited to a certain sum. It is most widely used to limit an individual's liability in a company or partnership to the value of their investment in the event that it is sued. Shareholders or other investors in limited liability companies and limited liability partnerships (LLP) are not personally liable for the debts of such companies. The company or the LLP is itself responsible for its debts. Sole proprietors and partners in general partnerships, however, are liable for all the debts of the business.
See also: Unlimited Liability