contingent liability


Also found in: Medical, Legal, Wikipedia.

Contingent Liability

A liability that a company may have to pay, but only if a certain future event occurs. Usually, a contingent liability refers to the outcome of a lawsuit: that is, the company may have to pay a significant amount of money if it loses the lawsuit. Contingent liabilities are recorded under accounts payable; their existence may also affect the share price.

contingent liability

An obligation that may result, but is not likely to result because the event causing the obligation is improbable. For example, the award from a lawsuit against a firm is a contingent liability of the defendant if there is little likelihood the plaintiff will recover the award.

contingent liability

a liability which may or may not occur depending upon an uncertain event, for example, the outcome of a court case in which damages are being claimed against a firm.

contingent liability

A liability that is not currently a liability but may become one upon the happening of some future event.If a father guarantees the student housing lease of his son,then the son is liable for the rent but the father may become liable if the son defaults. Other common contingent liabilities are guarantees of the debts of others,potential adverse judgments in litigation,and currently contested tax liabilities or audits. Lenders sometimes request a list of all contingent liabilities when evaluating a borrower's financial strength.

References in periodicals archive ?
The contingent liability is required as a consequence of needing to provide a Letter of Comfort in order that NEST can secure Master Trust status.
There have been several studies to examine the impact of contingent liability on debt sustainability (Krugman, 1999; Jeanne & Zettlemeyer, 2000; Demirgu-Kunt & Detragiache, 2000; Aghion et al., 2001; Burnside, 2004; Aghion et al., 2004; Burnside et al., 2003a, b; Chamon, 2007).
A regime of contingent liability is therefore unique in the sense that it requires shareholders to compensate depositors for losses out of their personal wealth if the remaining assets of the bank are insufficient to cover liabilities.
Coverages available: Auto (truck) liability, trailer interchange insurance, non-trucking use (bobtail/deadhead), occupational accident and health, physical damage, pollution liability for truckers, motor truck cargo, umbrella/excess, contingent liability, workers' comp, hired/non-owned coverage.
Accordingly the Directors will no longer include the contingent liability note relating to potential liquidated damages by NMT in the financial statements of EOS.
5, a contingent liability has to be probable and estimable for the amount to be recorded.
However, RSA chief executive Andy Haste said the group was not calling for additional funding and was comfortable with its pounds 200m contingent liability reserving.
"For quite some time, this has been the largest contingent liability facing the company.
That reduced its contingent liability to pounds 200 million from pounds 300 million.
37, a contingent liability should already be recorded in the acquiree's book at the date of acquisition, if probable and reliably estimable.
First, in every incrementally funded contract, there is a requirement to identify funds to cover the contingent liability for termination.
The settlement initiatives relate to corporate-owned life insurance (COLI), section 302/318 basis-shifting transactions, and section 351 contingent liability transactions that "have the potential for clogging the tax system, consuming significant resources, and preventing LMSB from making progress on other important issues." The Institute reiterated its concerns about the tax shelter disclosure regulations, urging the IRS to reinforce the message that disclosure of "reportable transactions" is not indicative whether the tax benefits are allowable and emphasize in training materials that the determination of the benefits of a transaction is independent of disclosure.