Meaning & use
contingent liability
Last updated
Meanings
nouncountablebusinessfinanceformal
A possible debt or obligation that depends on a future event and is recorded only if that event is likely.
Grammar: Countable: use 'a contingent liability' or 'contingent liabilities'.
Patterns
- a contingent liability of something
- disclose a contingent liability
- recognize a contingent liability
The company listed a contingent liability of $2 million related to the lawsuit.
Auditors asked the firm to disclose all contingent liabilities in the notes to the accounts.
nouncountablebusinessfigurative
In everyday business talk, any potential problem or cost that may or may not arise.
Grammar: Often used figuratively outside strict accounting.
Patterns
- a contingent liability for someone
- create a contingent liability
The old factory is a contingent liability for the town if the owner goes bankrupt.
Poor safety records can become a contingent liability for any airline.
Word forms
| plural | contingent liabilities |
|---|
Common combinations
- disclose a contingent liability
- Rules require firms to disclose a contingent liability if it is material.
- recognize a contingent liability
- The accountant decided not to recognize the contingent liability yet.
- contingent liability of
- They reported a contingent liability of €500,000.
- potential contingent liability
- The contract creates a potential contingent liability for the buyer.
Synonyms and how they differ
- potential obligation
- A broader phrase that can refer to any possible duty, not just one recorded in accounts.
- provision
- In accounting, a provision is a liability of uncertain timing or amount that is already recognized; a contingent liability is not recognized unless probable.
Opposites
Word family
- contingency noun
- A possible future event or situation that must be planned for.
- contingent adjective
- Depending on something else happening; used in 'contingent on'.
Commonly confused: contingent liability or contingency?
contingent liability vs contingency
A contingency is the possible event itself, while a contingent liability is the financial obligation that may follow from it.
Practice
Which sentence uses 'contingent liability' correctly?
Choose one answer.
A contingent liability is a possible obligation that depends on a future event, so 'may arise if' fits. Option 0 is wrong because once the court has ruled, the liability is no longer contingent. Option 2 is wrong because a contingent liability is not a regular payment. Option 3 contradicts the meaning of 'contingent'.
Make it your own
Write a sentence using “contingent liability”, then check it and compare it with the examples above.