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Precedents Business Law

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Precedent and the Court Structure

The law in the UK is made up of primarily two sources: statute and precedent. Although judges are required to apply statute - interpretation of statute follows common law principles including precedents.

Precedents are a concept in common law (England and Wales and other English speaking countries – US, Canada (except Quebec), Gibralter, Hong Kong etc) whereby a previous case if similar (in facts) is used to provide a consistent basis for decisions. Precedents are "binding" on a lower court that is to say they must be followed by a lower court if the decision was made by a higher court. They should also be followed by that court itself. The Latin term Stare Decisis (to maintain what has already been decided) is used to define this.

When a judgement is handed down by a judge it is in two parts 1. the ratio decidendi (the reason why) and 2. the orbita dictum (said by the way). The ratio decidendi is binding. The orbita dictum can be cited as persuasive but is not binding. Similarly a lower courts decision can be persuasive to a higher court but is not binding. The general concepts of the above are referred to as "case law" and help to develop and modify the law. Subsequently a great part of the work of a lawyer in a trial is to show how the facts of the particular case differ or resemble other cases to make their points of law in front of the court.

In civil law precedent is not followed in the same way and judges theoretically use the legislation alone to interpret the law, the argument being only the legislature has the authority to make law and that judges are merely interpreting it. In common law a single case can be decisive and major changes brought about by a case are known as "landmark rulings".

SUMMARY OF APPLICATION OF PRECEDENT IN UK COURTS European Court of Justice (ECJ) | Decisions, in matters of community law, are binding on ALL courts, including the Supreme Court. It is not bound by its own previous decisions. | European Court of Human Rights (ECHJ) | | Supreme Court (until October 2009 known as the House of Lords) | Binds all other courts in civil and criminal cases, whether right to make an appeal to it exists or not. It is not bound to follow its own cases, i.e. permitted to depart from a previous decision when it appears to be right to do so. | Court of Appeal | Civil:Binds all inferior courts, including the divisional courts. However, it is bound by the Supreme court and its own previous decisions.Principle that Court of Appeal is bound to follow its own decisions is subject to three exceptions:(1) Where there are two conflicting decisions, it must decide which to follow and the other will be over-ruled.(2) Where one of its earlier decisions is in conflict with a decision of the Supreme Court, but has not been expressly over-ruled by the Supreme Court, it must follow that of the Supreme court and ignore its own.(3) Where its earlier decision was given per incuriam (carelessly or by mistake)CriminalBinds all inferior criminal courts. However bound by decisions of the Supreme Court, divisional courts and itself.In addition to the exceptions outlined above, in criminal cases it may refuse to follow its own decisions where it would lead to injustice to the Appellant. | Divisional Court | Bound by the Supreme Court and the Court of Appeal and normally follows a previous decision of a Divisional Court, although it has similar exceptions to the Court of Appeal. | High Court | Bound by the Supreme Court and the Court of Appeal, but it is not bound other High Court decisions. However, they have a strong persuasive authority and are, in fact, usually followed. Decisions of individual High Court judges are binding on the county courts. | Crown Court | Decisions on points of law not binding, but considered persuasive authority. | County Courts and Magistrate’s Courts | The decisions of these courts are not binding. |

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