Chapter 1: What Is Liquor Liability & Who Has It?
Part 2: The Legal Scoop Behind Liquor Liability
The term "liquor liability" refers to your legal and / or financial responsibility for the actions of people who consume alcohol – and the consequences of those actions. Regardless of whether you are a small-business owner or an individual, you can be sued if a person who became intoxicated at your establishment or event causes harm to others or damages their property.
You are said to have liquor liability if you…
- Sell or distribute alcohol at your place of business.
- Allow patrons or guests to bring their own alcohol and consume it on your premises (i.e., you own a BYOB business).
- Serve alcohol at an event you're hosting.
- Allow others to serve alcohol at your venue.
There are three different types of laws that enforce liquor liability in the United States. They are:
- Dram shop laws. For commercial entities, such as bars, restaurants, caterers, or reception halls, dram shop laws enforce your legal responsibilities. Currently, 43 states have some kind of dram shop law, though each state has its own version. To learn more, jump to the section How Do Dram Shop Laws Hold Commercial Liquor Sellers Liable?
- Commonplace negligence laws. Even if a state doesn't have official dram shop laws on the books, it likely enforces commonplace negligence laws, which address culpability for negligent behavior (i.e., not doing what any reasonable person could be expected to do under a certain set of circumstances). With regard to alcohol, your establishment or servers could be sued if they fail to limit an intoxicated person's potential for harm or self-harm.
- Social host liability laws. For individuals who host parties and events, social host liability laws enforce your legal responsibility. At the time of this publication, half of the states have some version of social host laws, which hold the (non-commercial) host liable for bodily injuries or property damage arising from serving or distributing alcoholic beverages. For more information, jump to the How Do Social Host Ordinances Hold Event Hosts Liable? section of this guide.
Now that you understand the basics of liquor liability law, the next section will take a closer look at the individuals and entities that must follow these ordinances.
Next: Part 3: Affected Parties: Who's on the Hook for Liquor Liability?
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