The Difference Between Lay and Lie
As most people figure out in school, English is a tricky language. There are a huge number of rules to follow. And of course those rules all have exceptions. And even those exceptions have exceptions.
For example, consider the old "helpful" adage "I before E, except after C", which is true... sometimes. But of course words like "weigh" ruin that, so some people amend it to "I before E except after C or words like Weigh." Not only is that vague, it's just not true. "Their" doesn't have a C or a long "A" sound. Irritating, isn't it?
This leads us to one of the most dreaded grammatical differences in the English language: the difference between Lay and Lie. These words are so similar that many people don't even realize that they mean different things. Can you blame them? Based on common usage they seem practically interchangeable. However, in more educated circles, the difference is often noticed. And small mistakes can unfortunately cost a speaker a certain level of respect when he/she doesn't know the difference.
Laying it Out, No Lie
The difference between Lay and Lie is subtle, but definite.
Lay is something you do to an object.
For example: I'm going to lay down the pen.
Lie is an action you do to yourself. (Also known as a reflexive verb)
For example: I'm going to lie down on the bed.
The easiest way to remember the difference is to think about the other meaning of "lie". (To tell a lie) Remember, only people can lie. Objects cannot.
So even though a huge number of people use the word "lay" to refer to an action they're doing to themselves... (i.e. "I just want to lay on the beach")...they're not using the word correctly. The same is true when people ask someone to "Lie the plate down on the table". Again, since the plate is an object, we lay it on the table. The plate cannot "lie" in either sense of the word.
Another easy way to remember the difference is by thinking of popular expressions like "Lay down the law" or "Lay out your plan". In both cases, "lay" is describing an object that is being laid down. Nobody says they're going to "Lie down the law"...that just sounds wrong. That's of course, because it is wrong.
Can't The Past Be in the Past?
So that's it, right? Unfortunately, there is one other bit of information to cover. Lay and Lie have different past tenses, and these tend to trip people up, especially because the past tense of Lie, confusingly enough, is Lay. However, once you get the order down, it won't be difficult.
Present: Lay (I'm laying down the plate)
Past Tense: Laid (I laid down the plate)
Perfect Tense: Have Lain (I have lain down the plate already)
The past and perfect tenses of lay are not all that difficult to remember. However, Lie can be a bit tricky.
Present: Lie (I'm lying down on the couch)
Past Tense: Lay (I lay down for an hour yesterday)
Perfect: Lain (I have lain down every day for a week)
The past tense of lie is what most often trips people up in everyday conversation. Honestly, even though the correct past tense is indeed "lay", it's used correctly so infrequently that to many peoples' ears, it sounds straight up wrong. Many people use "laid" as the past tense of lie, which although common, is wrong.
In more informal settings, using Lay and Lie correctly may not matter all that much. It's not as though every conversation most people have is with a college professor or a librarian. (And in personal experience, I've heard both get this one wrong before). However, among highly educated people, this distinction is drilled early on. Thus, if you are trying to make an impression on someone who you know to be well educated, it is possible they may silently judge you for misusing these two words. I'm not supporting this practice, however, as of now, it is a fact of life.
The other problem is in written communication. Although many people do not know the difference between lay and lie, written communication is often judged more harshly than verbal communication. Almost every office and social group has someone in-affectionately known as a "grammar Nazi". Who wants to have the validity of their writing called into question by some "know it all" who calls attention to your completely understandable mistake?
In short, while the difference between lay and lie is fairly small, the distinction is a key grammatical mistake that educated people will recognize. In order to present yourself (and your writing) as polished and professional, it is important to understand the differentiation between the two.