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Protecting a Business from Dram Shop Laws

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What Are Dram Shop Laws and Commercial Host Liability?

Dram Shop Laws are state laws that hold businesses civilly liable for damages caused by overly intoxicated patrons. Commercial Host Liability is created when a business sells alcohol to visibly intoxicated customers or to minors. Businesses can be held liable for damages resulting from accidents and crimes such as drunken driving accidents, simple assault, and sexual assault.  

Dram shop laws vary from state to state, and there are a few states that have no dram shop laws at all. Several others, like California, make serving alcohol to obviously intoxicated customers a misdemeanor, rather than simply imposing civil liability.

Can a Business Limit Exposure to Commercial Host Liability?

Businesses can limit their exposure to commercial host liability by developing practices and procedures to prevent minors and visibly intoxicated customers from being served alcohol. In order to develop an effective plan, a business should know what their state's dram shop laws are.  

In order to prevent visibly intoxicated customers from being served, a business can:

  • Train employees in responsible alcohol service. Training programs such as TIPS, ServSafe-Alcohol, and TAMS are effective.
  • Refuse entrance or service to visibly intoxicated customers
  • Carefully control the amount of alcohol served in drinks
  • Develop clear policies and procedures to prevent over-serving
  • Strongly support employee's decisions to cut-off alcohol service to visibly intoxicated persons

In order to prevent minors from being served a business can:

  • Check all customers' IDs before serving them alcohol
  • Train bouncers and bartenders to spot fake IDs
  • Post signage that reflects the business's ID checking policy
  • Invest in an ID card scanning system
  • Carefully monitor tables where alcohol is served and minors are seated

By preventing minors and visibly intoxicated customers from being served, a business can limit exposure to commercial host liability. Additionally, liability insurance could be purchased in order to further limit liability in the event that the business is sued.

Can a Lawyer Help?

A business attorney can advise your business on your state's dram shop laws and help you develop policies and procedures which limit exposure to commercial host liability. Additionally, an attorney can help you choose a liability insurance policy that will protect your business in the event that you are sued. If a lawsuit is brought against your business for commercial host liability, a lawyer can advise you of your legal rights and defenses.

Photo of page author Matthew Izzi

, LegalMatch Legal Writer and Attorney at Law

Last Modified: 06-19-2018 05:16 PM PDT

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