The applicability of precedent is dependent on four main rules: ratio decidendi, obiter dictum, binding precedent, and persuasive precedent.

Ratio decidendi

This legal maxim translates to “the reasoning behind the decision”. The judge’s ratio decidendi is what forms precedent, rather than sanction or remedy handed down.

Obiter dictum

This legal maxim refers to additional statements made by the court that do not form part of the “ratio decidendi”. These statements, on legal issues, may be persuasive on the future decisions of courts.

Binding precedent

Lower courts are bound to follow precedent set by higher courts in the same hierarchy for like cases. The principle of “stare decisis” (to stand by what has been decided). Therefore, for precedent to be binding, it must satisfy three criteria

• It must come from a higher court
• It must come from the same court hierarchy
• The facts of the precedent setting case must be significantly similar to the case at hand

Persuasive precedent

Persuasive precedent means that courts do not have to follow a particular court-made decision, but may be influenced by it. For a precedent to be persuasive, it may satisfy any of four criteria:

• A decision from a lower court
• A decision from a court on the same level
• An “obiter dictum” statement
• A court outside the court hierarchy e.g. an interstate or overseas court

See also:

Doctrine of precedent

Flexibility of precedent

Difficulties in applying past decisions