What is liability (legal)?
Liability, in the legal sense, is the state of being legally responsible for an obligation, a wrongful act, a debt or damages. Liability arises from contract breach, tort, statute, strict liability regimes or fiduciary duty.
Startups manage liability exposure through entity structuring (limited liability companies and corporations), insurance (D&O, E&O, product liability), contractual risk allocation (indemnities, limitations of liability, caps), compliance programmes and proper documentation.