Dram Shop Laws: History and Explanation in Alcohol Sales

What Are Dram Shop Laws?

Dram shop laws hold a business liable for serving or selling alcohol to minors or intoxicated persons who later cause death, injury, or property damage to another person. These laws were first introduced in the 18th century during the temperance movements that ultimately led to the prohibition of alcohol in the U.S. in the early 20th century.

Understanding Dram Shop Laws

In the United States, each state establishes a statute, Dram Shop Act, which holds establishments liable in certain circumstances and to varying degrees, depending on the applicable law in the state.

The term "dram shop law" comes from the 18th century British way of measuring alcohol, which was called "dram" and measured out to 3/4 of a teaspoon. Dram shops were the bars, pubs, taverns, and other establishments that served drams of alcohol. Today, dram shop regulations apply to all businesses that sell or serve alcohol. Such establishments include restaurants, bars, liquor stores, taverns, and stadium vendors.

Dram shop laws enable third-party victims of drunken behavior to file civil lawsuits against the establishment, the wait staff, or the store clerk that sold alcohol to the minor or intoxicated person. Victims may also bring suit against the intoxicated individual and possibly receive damages from both parties.

In a third-party dram shop case, the victim of the intoxicated customer may sue the establishment that excessively served the customer. Liability verdicts look at common negligence laws, reckless behavior, and intentional misconduct. 

In some states, dram shop laws also allow the drinker to bring suit against a business that sold them alcohol in first-party litigation. In a first-party dram shop case, if the intoxicated customer sustains injury resulting from their drunkenness, they may sue the business, server, or store clerk for over-serving them. However, most states prohibit such claims by people of legal drinking age.

Dram Shop Liability

Proving liability is a challenge for third-party victims. Bartenders may be unable to determine a patron's level of intoxication and may not know if they will operate a vehicle. State law provides a series of items that the victim (plaintiff) must prove. These items include proof the establishment sold alcohol to the visibly intoxicated person (defendant) who caused the accident and evidence that the establishment's alcohol sale resulted in the defendant's intoxication.

Businesses should train employees on how to identify and not serve or sell alcohol to visibly intoxicated individuals or minors. Examples of intoxication include slow or slurred speech, bloodshot eyes, loss of balance or coordination, and exhibiting obnoxious, aggressive, or emotional behavior. State law may require establishments to post a notice stating they do not sell alcohol to observably intoxicated patrons.

Proponents of dram shop laws cite proof that these laws reduce alcohol-related crashes. They cite the statutes for an increase in public awareness of the effects of over-serving alcohol and a decrease in excessive and illegal alcohol consumption. The goal is to give establishments that serve and sell alcohol an incentive to do so responsibly and to thoroughly verify that clients are of legal drinking age. Before dram shop laws, alcoholic beverage sellers were not legally responsible for a plaintiff's injuries.

Similar to dram shop laws are social host liability laws. The host of a private function where alcohol is served or sold may be at fault for injuries or death caused by a minor or an observably intoxicated person to whom they were the host. The social host law is especially crucial around university and college campuses.