What is "contractual liability"?

Contractual liability refers specifically to the obligation one party assumes under a contract that can lead to legal consequences if that obligation is not fulfilled. For instance, if a business agrees to provide services or deliver goods by a certain date and fails to do so, they may be held liable for any damages incurred by the other party as a result of that breach. This type of liability exists because of the terms agreed upon in the contract between the parties involved.

In contrast, the other options refer to different aspects of liability. Legal actions against a company (as mentioned in option B) can arise from various sources, such as negligence or regulatory violations, rather than being limited to contractual obligations. Professional liability (noted in option C) focuses specifically on the services provided by professionals and does not encompass all contractual obligations. Lastly, liability for environmental damages (option D) pertains to specific regulations and laws regarding environmental protection and does not relate directly to contractual agreements. Therefore, understanding contractual liability is crucial for businesses to mitigate risks tied to contractual obligations.