Legal Definitions - dram shop rule

The dram shop rule (also known as a dram shop law or act) is a type of civil liability statute that holds commercial establishments, and in some places even private individuals, responsible for harm caused by their intoxicated customers or guests.

A "dram shop" traditionally referred to a place where spirits were sold by the "dram" (a small measure), but today it broadly includes any commercial establishment that sells alcoholic beverages, such as bars, restaurants, taverns, and liquor stores.

Under a dram shop rule, such an establishment can be held liable if it negligently serves alcohol to a customer who is visibly intoxicated or underage, and that customer then causes harm as a direct result of their intoxication. While most jurisdictions limit this liability to harm caused to a third party (someone other than the intoxicated person), some states also allow the intoxicated person themselves to sue the establishment for injuries they sustained due to their own intoxication (known as first-party harm). Furthermore, some jurisdictions extend these rules to include "social hosts" – private individuals who serve alcohol at parties or gatherings.

The core principle is that the establishment or host acted negligently by serving alcohol when they knew, or reasonably should have known, that the person was already intoxicated or was not of legal drinking age, and this negligent service directly contributed to the subsequent harm.

Here are some examples illustrating the dram shop rule:

• Example 1: Third-Party Injury from Public Disturbance

  A sports bar serves numerous strong alcoholic drinks to a patron who becomes increasingly loud, aggressive, and visibly unsteady on their feet. Despite their obvious intoxication, the bar staff continues to serve them. The patron eventually stumbles out of the bar and, in a fit of drunken rage, knocks over a street vendor's cart, destroying their merchandise and causing the vendor to fall and sustain a sprained wrist.

  How it illustrates the rule: The sports bar is a "dram shop" that negligently served an obviously intoxicated customer. The customer's intoxication, directly resulting from the bar's negligent service, led to property damage and physical injury to a third party (the street vendor). Under the dram shop rule, the vendor could sue the bar for their losses and injuries.

• Example 2: Underage Drinking Leading to Property Damage

  A convenience store clerk sells a large case of beer to a group of teenagers who present clearly fake identification cards that the clerk barely glances at. The teenagers then consume the alcohol at a local park, become highly intoxicated, and proceed to vandalize park benches and playground equipment, causing thousands of dollars in damage to public property.

  How it illustrates the rule: The convenience store, acting as a "dram shop," negligently sold alcohol to underage individuals. The store's failure to properly verify age, leading to the teenagers' intoxication, directly resulted in significant property damage to a third party (the municipality owning the park). The city could potentially sue the convenience store under dram shop laws.

• Example 3: First-Party Injury in a State Allowing Such Claims

  In a state that permits first-party dram shop claims, a restaurant's bartender continues to serve a customer who is slurring their words, struggling to maintain balance, and repeatedly falling asleep at the bar. After being served several more drinks, the customer attempts to leave the restaurant, trips down a short flight of stairs inside the establishment due to their extreme intoxication, and suffers a broken leg.

  How it illustrates the rule: The restaurant is a "dram shop" that negligently overserved a customer who was visibly intoxicated. In jurisdictions that allow first-party claims, the customer's own injury, directly caused by their intoxication resulting from the restaurant's negligent service, could be grounds for a lawsuit against the restaurant.