Business, Legal & Accounting Glossary

Definition: Precedent

Quick Summary of Precedent

An earlier event or action that is regarded as an example or guide to be considered in subsequent similar circumstances. When deciding on a particular case, judges will be attentive to the decisions made by other judges in similar cases. These judgements are called ‘precedents’. Some precedents will be binding on a particular court; for example, a decision of the Court of Appeal cannot easily be overridden by lesser courts if the circumstances of the case are similar (see: Stare decisis). Of course, the judge has some flexibility in deciding how similar a current case is to precedent. Note that only the ratio dicidendi of a judgement — that is the decision actually made and its reasons (see: Ratio dicidendi) — is binding, not points discussed as an aside (see: Obiter dicta).

Some precedents may be ‘persuasive’, but not binding. Persuasive precedents include rulings of the Privy Council, and some Commonwealth and US courts, and statements made obiter dicta in earlier judgements.

It is probably fair to say that the principles of binding precedent are applied more strictly in civil, rather than criminal, cases.

What is the dictionary definition of Precedent?

Dictionary Definition

A precedent is a statement of law found in the decision of a superior court, which decision has to be followed by that Court and by Courts inferior to it. If each judge were left to himself in deciding cases without reference to similar cases decided in the pat, the result would be utter confusion and chaos, the law would be uncertain, and the fate of litigants would hinge on the temperament of the judge or his mood of the day. Uniformity can only be achieved by the judges following, as far as possible, the law laid down by their fellow judges. It is through precedents that the judges herald the law to the world. Thus, the theory of precedent plays a very important role in the jurisprudence of every country.

  1. An act in the past which may be used as an example to help decide the outcome of similar instances in the future.
  2. legal A decided case which is cited or used as an example to justify a judgment in a subsequent case.
  3. obsolete, with definite article The aforementioned (thing).

Full Definition of Precedent

A precedent is a legal case which establishes a standard for how other cases which follow should be handled. Precedents can be binding, which means they should be followed by other courts in most situations, or persuasive, which means they can be followed but are not mandatory. The concept of precedence in law comes from English common law. In the words of Salmond, “the importance of judicial precedents has always been a distinguishing characteristic of English Law”.

Precedents are of greatest importance in any system of law which is mostly unwritten, as in England. Whatever may be the position, in theory, it must be admitted that, in practice, the common law of England has been the work of English judges.

Legal precedent is created as the law is interpreted by judges as they make rulings on cases. This type of common law, which is made and interpreted by judges, differs from statutory law which is created by the legislature (both state and federal).

US Precedent

A legal principle or rule created by one or more decisions of a state or federal appellate court. These rules provide a point of reference or authority for judges deciding similar issues in later cases. Lower courts must apply these rules when faced with similar legal issues. For example, if the Montana Supreme Court decides that a certain type of employment contract overly restricts the right of the employee to quit and get another job, all other Montana courts must apply this same rule.

The court system in the U.S. has historically relied on the doctrine of stare decisis or “to stand by and adhere to decisions and not disturb what is settled” which means that future court cases should follow the decisions which have been established through legal precedent. This applies specifically to courts which are within the same jurisdiction.


Cite Term

To help you cite our definitions in your bibliography, here is the proper citation layout for the three major formatting styles, with all of the relevant information filled in.

Page URL
Modern Language Association (MLA):
Precedent. Payroll & Accounting Heaven Ltd. September 28, 2021
Chicago Manual of Style (CMS):
Precedent. Payroll & Accounting Heaven Ltd. (accessed: September 28, 2021).
American Psychological Association (APA):
Precedent. Retrieved September 28, 2021, from website:

Definition Sources

Definitions for Precedent are sourced/syndicated and enhanced from:

  • A Dictionary of Economics (Oxford Quick Reference)
  • Oxford Dictionary Of Accounting
  • Oxford Dictionary Of Business & Management

This glossary post was last updated: 23rd April, 2020 | 65 Views.