Precedent

Precedent is a judicial decision that serves as an authority for courts when deciding subsequent identical or similar cases. Fundamental to common law legal systems, precedent operates under the principle of stare decisis, where past judicial decisions serve as case law to guide future rulings, thus promoting consistency and predictability.
Precedent is a defining feature that sets common law systems apart from civil law systems. In common law, precedent can either be something courts must follow or something they can consider but do not have to follow. Civil law systems, in contrast, are characterized by comprehensive codes and detailed statutes, with little emphasis on precedent, and where judges primarily focus on fact-finding and applying the codified law.
Courts in common law systems rely heavily on case law, which refers to the collection of precedents and legal principles established by previous judicial decisions on specific issues or topics. The development of case law depends on the systematic publication and indexing of these decisions in law reports, making them accessible to lawyers, courts, and the general public.
Generally speaking, a legal precedent may be:

applied / adopted, if the principles underpinning the previous decision are accordingly used to evaluate the issues of the subsequent case;
distinguished, if the principles underpinning the previous decision are found specific to, or premised upon, certain factual scenarios, and not applied to the subsequent case because of the absence or material difference in the latter's facts;
modified, if the same court on determination of the same case on order from a higher court modified one or more parts of the previous decision; or
overruled, if the same or higher courts on appeal or determination of subsequent cases found the principles underpinning the previous decision erroneous in law or overtaken by new legislation or developments.
Principles

''Stare decisis''

Stare decisis is a judicial doctrine under which courts follow the principles, rules, or standards established in their prior decisions when deciding cases involving the same or closely related issues. The term originates from the Latin phrase stare decisis et non quieta movere, meaning to "stand by the thing decided and do not disturb the calm."
The doctrine operates both horizontally and vertically. Vertical stare decisis binds lower courts to strictly follow the decisions of higher courts within the same jurisdiction. The Seventh Circuit Court of Appeals applying a precedent set by the U.S. Supreme Court is an example of vertical stare decisis. Horizontal stare decisis refers the principle that a court adheres to its own previous rulings.
In the modern era, the U.S. Supreme Court adheres to its prior decisions unless there is a special justification to overrule precedent. By taking this approach, the Court has rejected a strict view of stare decisis that would require it to uphold past rulings regardless of their merits or the practical consequences of maintaining or overturning them.

''Ratio decidendi'' and ''obiter dicta''

Ratio decidendi refers to the key factual element or line of reasoning in a case that forms the basis for the court's final judgment. It forms the basis for a court decision and creates binding precedent. This distinguishes it from other parts of a judicial opinion, such as obiter dicta.
In contrast, obiter dicta refers to comments, suggestions, or observations made by a judge in an opinion that are not necessary to resolve the case at hand. While not legally binding on other courts, such statements may be cited as persuasive authority in subsequent litigation.

Hierarchy of courts

Federalism and parallel state and federal courts

In federal systems the division between federal and state law may result in complex interactions. In the United States, state courts are not considered inferior to federal courts but rather constitute a parallel court system.

When a federal court rules on an issue of state law, the federal court must follow the precedent of the state courts, under the Erie doctrine. If an issue of state law arises during a case in federal court, and there is no decision on point from the highest court of the state, the federal court must either attempt to predict how the state courts would resolve the issue by looking at decisions from state appellate courts, or, if allowed by the constitution of the relevant state, submit the question to the state's courts.
On the other hand, when a state court rules on an issue of federal law, the state court is bound only by rulings of the Supreme Court, but not by decisions of federal district or circuit courts of appeals. However, some states have adopted a practice of considering themselves bound by rulings of the court of appeals embracing their states, as a matter of comity rather than constitutional obligation.

In practice, however, judges in one system will almost always choose to follow relevant case law in the other system to prevent divergent results and to minimize forum shopping.

Types of precedent

Binding precedent

Binding precedent, based on the legal principle of stare decisis, requires lower courts to follow the decisions of appellate courts in the same jurisdiction. In other words, when an appellate court resolves a question of law, its determination, or "holding," serves as precedent that lower courts are bound to apply in cases involving similar facts or legal issues.
For example, in the United States, decisions of the U.S. Supreme Court, as the nation's highest court, are binding on all other courts nationwide.

Persuasive precedent

Persuasive precedent refers to legal decisions that a court may consider but is not obligated to follow when deciding a case, as they are not binding. Examples include decisions from courts in neighboring jurisdictions and dicta from rulings by higher courts. In Australia, decisions of superior overseas courts, such as those from the United Kingdom, serve as persuasive precedent.
Although not binding precedent, a court may choose to rely on persuasive precedent if the reasoning is compelling. Courts often turn to decisions from other jurisdictions for guidance, particularly when interpreting unclear laws or addressing "cases of first impression"—situations in which no prior binding authority exists and the court must determine the applicable law for the first time.

Nonprecedential decisions

Nonpublication of opinions, or unpublished opinions, are those decisions of courts that are not available for citation as precedent because the judges making the opinion deem the cases as having less precedential value. Selective publication is the legal process which a judge or justices of a court decide whether a decision is to be or not published in a reporter. "Unpublished" federal appellate decisions are published in the Federal Appendix. Depublication is the power of a court to make a previously published order or opinion unpublished.
Litigation that is settled out of court generates no written decision, thus has no precedential effect. As one practical effect, the U.S. Department of Justice settles many cases against the federal government simply to avoid creating adverse precedent.

Precedent in civil law and mixed systems

Civil law systems

Stare decisis is not usually a doctrine used in civil law systems, because it violates the legislative positivist principle that only the legislature may make law. Instead, the civil law system relies on the doctrine of jurisprudence constante, according to which if a court has adjudicated a consistent line of cases that arrive at the same holdings using sound reasoning, then the previous decisions are highly persuasive but not controlling on issues of law. This doctrine is similar to stare decisis insofar as it dictates that a court's decision must condone a cohesive and predictable result. In theory, lower courts are generally not bound by the precedents of higher courts. In practice, the need for predictability means that lower courts generally defer to the precedent of higher courts. As a result, the precedent of courts of last resort, such as the French Cassation Court and the Council of State, is recognized as being de facto binding on lower courts.
The doctrine of jurisprudence constante also influences how court decisions are structured. In general, court decisions of common law jurisdictions give a sufficient ratio decidendi as to guide future courts. The ratio is used to justify a court decision on the basis of previous case law as well as to make it easier to use the decision as a precedent for future cases. By contrast, court decisions in some civil law jurisdictions tend to be extremely brief, mentioning only the relevant legislation and codal provisions and not going into the ratio decidendi in any great detail. This is the result of the legislative positivist view that the court is only interpreting the legislature's intent and therefore detailed exposition is unnecessary. Because of this, ratio decidendi is carried out by legal academics who provide the explanations that in common law jurisdictions would be provided by the judges themselves.
In other civil law jurisdictions, such as the German-speaking countries, ratio decidendi tend to be much more developed than in France, and courts will frequently cite previous cases and doctrinal writers. However, some courts have less emphasis on the particular facts of the case than common law courts, but have more emphasis on the discussion of various doctrinal arguments and on finding what the correct interpretation of the law is.
The mixed systems of the Nordic countries are sometimes considered a branch of the civil law, but they are sometimes counted as separate from the civil law tradition. In Sweden, for instance, case law arguably plays a more important role than in some of the continental civil law systems. The two highest courts, the Supreme Court and the Supreme Administrative Court, have the right to set precedent which has persuasive authority on all future application of the law. Appellate courts, be they judicial or administrative, may also issue decisions that act as guides for the application of the law, but these decisions are persuasive, not controlling, and may therefore be overturned by higher courts.