Most states have a dram shop law to deter providers of alcoholic beverages (servers, liquor stores, bars, restaurants) who sell or serve alcoholic beverages under authority of a license or permit from selling or serving alcoholic beverages to obviously intoxicated individuals.

These laws generally eliminate any liability of servers, liquor stores, bars, and restaurants when a person to whom they sell or serve alcohol causes personal injury or property damage—whether in an automobile accident, a fight, or other incident—unless the person to whom they sell or serve alcohol is obviously intoxicated.

Laws regarding dram shop liability vary from state to state and are usually located in a state’s statutes.

In Tennessee, dram shop laws are codified under Tennessee Code Annotated § 57-10-101 et seq. These laws allow for a cause of action against a server, liquor store, bar, or restaurant that sells or serves alcohol to an obviously intoxicated individual or to a minor, if the consumption of the alcohol directly results in personal injury, death, or property damage. To establish liability, it must be proven that the establishment or individual selling or serving the alcohol was aware or should have been aware of the intoxication. Tennessee's dram shop act is more limited compared to some other states, as it requires clear evidence of the server's knowledge of the patron's intoxication. Additionally, the law provides a defense for establishments if the alcohol was provided to the individual without charge.