Statutes, also called civil liability acts, that impose civil liability upon one who sells intoxicating liquors when a third party has been injured as a result of the purchaser's intoxication and such sale has either caused or contributed to the state of intoxication.
A dramshop is any type of drinking establishment where liquor is sold for consumption on the premises, such as a bar, a saloon, or, in some cases, a restaurant. Under dramshop acts, the seller of liquor can be sued by an individual who is injured by an intoxicated person. Such acts protect the injured third party not only against personal injuries and property damages resulting directly from the actions of the intoxicated individual (such as those resulting from drunken driving or Assault and Battery) but also against the loss of family support owing to such injuries. Generally, the person who became intoxicated cannot sue the seller if she or he is injured, nor can any active participant in the drinking.
The dramshop laws are based on the principle that anyone who profits from the sale of alcoholic beverages should be held liable for any resulting damages. For a seller to be held liable, it is unnecessary to show that he or she is negligent, provided it is proved that the seller sold liquor to a habitual drunkard or a person who was already drunk, which is generally illegal in itself.
Dramshop acts originated in the Temperance Movement of the mid-1800s. In Illinois, for example, the first such law was passed in 1872 and amended in subsequent decades. By the 1990s, more than forty states had either dramshop acts or court rulings that made a commercial server or seller of alcohol liable if an intoxicated customer caused an accident or injury upon leaving the server's or seller's establishment (e.g., the Iowa Alcoholic Beverage Control Act [Iowa Code Ann. § 123.92 (West)]). Typical modern statutes include limitations on awards, specifications regarding the commercial defendant's type and degree of liability, and a Statute of Limitations.
By the late 1980s, dramshop statutes and court rulings had caused a dramatic increase in lawsuits involving liquor liability, with a corresponding increase in damage awards to victims. As a result, liquor liability insurance became increasingly expensive and difficult to obtain.
To guard against costly dramshop suits, liquor vendors have taken a variety of steps to prevent negligent behavior: eliminating "happy hours," reducing late-night operation, offering free Breathalyzer tests, instituting designateddriver programs, and training servers on how to deal with intoxicated patrons. Several states have made precautions such as these mandatory. Some, such as Oklahoma, have banned happy hours (see 37 Okla. Stat. Ann. § 537 [West]); others have required server training. Many insurance companies either require such preventive measures or offer incentives for their use.
Many states have extended dramshop liability to corporate or individual social hosts who provide alcoholic beverages without charge. This new source of liability has produced an extraordinary number of lawsuits. Accordingly, individuals wishing to host a social or business function in one of these states would now be required to take many of the same precautions commercial establishments do, including obtaining liquor liability insurance, or else they would have to hold their gathering at an insured bar or hotel.
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