contingent liability
- A potential financial obligation that could occur based on a future event, like a loan that may need to be paid if the original borrower fails to do so
- If the company fails to meet the terms of the contract, they could face a contingent liability.
- The bank deemed the business as high risk due to the presence of a significant contingent liability.
- The presence of a contingent liability on the financial statement can affect the company's credit rating.
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