Detect click outside element

Just move the body click handler outside and do something like this:

$('body').bind('click', function(e) {
    if($(e.target).closest('#menu').length == 0) {
        // click happened outside of menu, hide any visible menu items
    }
});

It was incorrectly pointed out in the comments that e.target does not work in IE; this is not true as jQuery's Event object fixes these inconsistencies where necessary (IE, Safari).

I wrote this a long time ago, before the glory days of jQuery...

function clickedOutsideElement(elemId) {
  var theElem = getEventTarget(window.event);
  while(theElem != null) {
    if(theElem.id == elemId)
      return false;
    theElem = theElem.offsetParent;
  }
  return true;
}

function getEventTarget(evt) {
  var targ = (evt.target) ? evt.target : evt.srcElement;
  if(targ != null) {
    if(targ.nodeType == 3)
      targ = targ.parentNode;
  }
  return targ;
}

document.onclick = function() {
  if(clickedOutsideElement('divTest'))
    alert('Outside the element!');
  else
    alert('Inside the element!');
}