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Dram shop or dramshop is a legal term in the United States referring to a bar, tavern or the like where alcoholic beverages are sold. Traditionally, it referred to a shop where spirits were sold by the dram, a small unit of liquid.
Dram shop liability refers to the body of law governing the liability of taverns, liquor stores and other commercial establishments that serve alcoholic beverages. Generally, dram shop laws establish the liability of establishments arising out of the sale of alcohol to visibly intoxicated persons or minors who subsequently cause death or injury to third parties (those not having a relationship to the bar) as a result of alcohol-related car crashes and other accidents.
The laws are intended to protect the general public from the hazards of serving alcohol to minors and intoxicated patrons. Groups such as Mothers Against Drunk Driving (MADD) have advocated for the enforcement and enactment of dram shop laws across the United States as well as in the United Kingdom, Canada, New Zealand and Australia. The earliest dram shop laws date from the 19th century temperance movement.
The laws have drawn criticism by those who claim they downplay the role of personal responsibility.
Serving alcohol to minors is illegal in all 50 states. Many states impose liability on bars for serving minors who subsequently injure themselves or others; deterring minors from being served alcohol. Thus in states like Texas and New Jersey, minors can sue a drinking establishment for their own injuries sustained while intoxicated. In Texas, this also applies to minor served alcohol at a residential property. In other states, dram shop liability only extends to serving the "habitually intoxicated."
The majority of states allow for recovery when the defendant knew (or should have known) the customer was intoxicated. Some states have attempted to address this problem through more exacting tests. Missouri's recently revised dram shop law requires proof that the party demonstrates "significantly uncoordinated physical action or significant physical dysfunction." In Texas, a patron must be so obviously intoxicated that he presents a clear danger to himself and others.
On the other hand, in Massachusetts, the state's highest court has held that a bar could be sued where a patron exhibiting "drunk, loud and vulgar" behavior was determined to be "visibly intoxicated," Cimino v. The Milford Keg, Inc., 385 Mass. 323 (1981). In Cimino, evidence showed that the intoxicated patron had been served six or more White Russians by the Milford Keg bar. The patron left the bar, arriving at another bar about fifteen minutes later "totally drunk," holding a White Russian. The next bar that he went to refused to serve him. Shortly thereafter, the intoxicated patron lost control of his car, drove on a sidewalk, and killed a pedestrian.
Under Illinois' dram shop law, plaintiffs can recover after demonstrating that:
Proximate cause includes the requirement that the dram shop must have been able to foresee that its actions could cause injuries to third parties, but this is true for any establishment that serves (sells) alcohol. One Illinois court allowed a lawsuit against a company that dropped off self-serve barrels of beer at a union picnic.
In Texas, dram shops are able to protect themselves from any claims of liability provided they are able to prove that they require all their employees to attend a TABC-approved “seller training program” and that the employee accused of over-serving an intoxicated individual actually attended the program. If these criteria are met, then any plaintiff seeking to sue the dram shop must prove that the employer either directly or indirectly encouraged said employee to violate the Texas Dram Shop Act in order for there to be liability. This dram shop immunity is called "The Safe Harbor." 
Different states' dram shop acts also differ as to whether a person who becomes intoxicated and injures themselves has a cause of action against the establishment that served them. Some states, such as New Jersey, will allow such a cause of action but will instruct the jury to take the intoxicated person's own negligence into account. Other states, such as New York, will not allow a person who injures themselves to bring a lawsuit against the bar that served them, but if that person dies will allow such a person's children to sue the drinking establishment for loss of parental consortium.
According to a 2004 comparison by YAERD, a U.S. organization that studies alcohol use among youth, Michigan and Alaska, whose dram shop laws are considerably narrower than MADD proposes, have drunk-driving fatality rates below the national average, while Illinois is above the national average despite having one of the broadest dram shop laws. Comparisons between a rural state like Alaska, with the lowest population density in the United States, with that of Illinois, which includes the Chicago metropolitan area and other major cities, may not be scientifically valid because of the existence of confounding variables. A 1993 study from the National Bureau of Economic Research found some reduction in alcohol-related fatalities from the implementation of dram shop laws though it did not control for the special cases of Utah and Nevada, which may have distorted the results.