Should I say anything to my friend?

I'd keep an eye on them at the next 'do' and go and interject by planting myself between them, if necessary. Just for a chat..

Ah! The demon drink.?
A lot of people become flirty at 'do's' ( a bit of a do!) don't worry about it.

Not to worry. I once proposed to my best friends husband at a BBQ where the wine was flowing freely.

Thereafter she always referred to him as 'your financé' when talking to me about him.

I agree with VQ , probably just the result of too much alcohol. Some people are more touchy feely than others as well. Forget what you saw, you could cause a lot of harm by saying something.

I'm with yggdrasil and think you should keep out of it. The hand on knee might be nothing at all. Was she rubbing his knee provocatively or just placing her hand there? If they are having a wild affair they are not being very secret about it are they? You could be horribly wrong and cause an untold amount of damage by saying something.

I agree stay right out of it, they shoot the messenger don't forget

I would keep it to myself and say nothing.

Stay out of it. Flirting when drunk isn't worth mentioning and upsetting everyone.

Why not talk to the husband ?

My personal thoughts are that, even if it happened in your garden, it is none of your business. I wouldn't appreciate anyone telling me gossip like that. You didn't see anything except behaviour you interpret as flirting. Just forget all about it.