LIABILITY

1) In the broad legal sense, responsibility or obligation. For example, a person is liable to pay his debts, under the law; 2) In accounting, any debt owed by an individual or organization. Current, or short-term, liabilities are those to be paid in less than one year (wages, taxes, accounts payable, etc.). Long-term, or fixed, liabilities are those that run for one year or more (mortgages, bonds, etc.); 3) In futures, traders deposit margin as earnest money, but they are liable for the entire value of the contract; 4) In futures options, purchasers of options have their liability limited to the premium they pay; option writers are subject to the liability associated with the underlying deliverable futures contract.