contractual liability, define
consider contractual liability insurance. Itâs just one more aspect of risk management that should be part of your overall business strategy. What Is Contractual Liability? Before you understand the importance of contractual liability insurance, you should first understand the legal definition of contractual liability. Contractual liability is liability that you assume on behalf of another party as a result of a contractual agreement. You might have heard it called a âhold harmlessâ clause in some legal settings.