Your comprehensive guide for starting a bar business

Liabilities of Bar Ownership

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Perhaps the greatest liability of any bar owner is the problem of intoxicated patrons. Because public safety can be at risk and the consequences are so sever, you should fully understand the implications of dram laws and what they mean for your bar business. "Dram shop" is a reference to colonial times when alcohol-serving establishments (shops) used units of liquid measurement called drams to serve alcohol.

Dram shop laws make it possible for bar owners and alcohol servers to be held financially liable if a customer becomes obviously intoxicated on their premises and subsequently injures someone or causes property damage, typically by driving drunk. Dram laws are not limited to motor vehicle accidents - they can encompass liabilities associated with physical or sexual assault and death to over- intoxication or ‘alcohol poisoning.’ If one of your patrons becomes visibly intoxicated at your bar, gets in a car and kills someone on the way home, then you can be sued for damages. You also have an ethical responsibility to keep your patrons safe. No bar owner wants to feel responsible for harm that may come to their customers.

Dram shop laws vary state to state (a few states, notably Nevada, do not have dram shop laws, but the majority do) and are applicable in the following circumstances:

  • Intoxicated patron operates a motor vehicle and causes harm to a 3rd party.
  • Intoxicated patron causes injury to his or her own person.
  • Intoxicated patron causes injury to a third party not resulting from a motor vehicle.
  • Establishment does not take appropriate measures to ensure that alcohol is not served to persons under the legal drinking age.
  • Owner or employee serves patrons who are noticeably intoxicated.
  • Death results from the patron being intoxicated.

The question that inevitably arises in court pertains to how visibly drunk the patron was before he or she got in the car. Would a reasonable person be able to tell that the patron was obviously drunk?

From your perspective, the answer will most typically be no. Unless your customer is falling down or passed out, it may be difficult, if not impossible to determine if they are intoxicated, especially in a noisy, crowded environment. Many factors go into an individual’s level of intoxication – age, gender, weight, medications. Some people who can ‘hold their liquor’ may appear to be fine well after the point of legal intoxication. How do you manage the liabilities of bar ownership? Training and zero tolerance. Make sure every employee is well trained to be aware of service and to card all patrons who appear to be close to the legal drinking age. Consult with your attorney and insurance provider as well, so that you are prepared if something tragic does happen to one of your patrons.

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