Answer to Question 1
To understand dram shop (third-party) liability legislation, managers must recognize that when an illegal sale of alcohol occurs and an accident or injury results, there are three (not two) parties involved in the incident. The first party is the individual who has consumed the alcohol. The second party is the operation or individual who served the alcohol. The third party is the injured person (or persons) who was not involved in either the selling or drinking of the alcohol. Society increasingly considers that the liability for any damages to the third party is borne by both the first and second parties. As a result, it is important that managers take all reasonable steps to ensure they serve alcohol responsibly and legally.
Answer to Question 2
In a lawsuit related to the sale of alcoholic beverages, the plaintiff is the party that claims to have suffered a loss as the result of something the defendant did or did not do. A manager or company that is a defendant and has not used reasonable care in a specific situation that required a duty of care and that resulted in damages to the plaintiff will, in most lawsuits, be declared legally negligent. As such it will be potentially liable, or legally responsible, for the consequences of what it did or failed to do. If it is determined the plaintiff is correct and the defendant is found to be liable for damages done to the plaintiff, the penalty assessed can include actual (real) damages or punitive damages (damages designed to punish and prevent future occurrences).
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