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A court decision that is cited as an example or analogy to resolve similar questions of law in later cases.
The Anglo-American common-law tradition is built on the doctrine of stare decisis ("stand by decided matters"), which directs a court to look to past decisions for guidance on how to decide a case before it. This means that the legal rules applied to a prior case with facts similar to those of the case now before a court should be applied to resolve the legal dispute.
The use of precedent has been justified as providing predictability, stability, fairness, and efficiency in the law. Reliance upon precedent contributes predictability to the law because it provides notice of what a person's rights and obligations are in particular circumstances. A person contemplating an action has the ability to know beforehand the legal outcome. It also means that lawyers can give legal advice to clients based on settled rules of law.
The use of precedent also stabilizes the law. Society can expect the law, which organizes social relationships in terms of rights and obligations, to remain relatively stable and coherent through the use of precedent. The need is great in society to rely on legal rules, even if persons disagree with particular ones. Justice Louis D. Brandeis emphasized the importance of this when he wrote, "Stare decisis is usually the wise policy, because in most matters it is more important that the applicable rule of law be settled than that it be settled right" (Burnet v. Coronado Oil & Gas Co., 285 U.S. 393, 52 S. Ct. 443, 76 L. Ed. 815 ).
Reliance upon precedent also promotes the expectation that the law is just. The idea that like cases should be treated alike is anchored in the assumption that one person is the legal equal of any other. Thus, persons in similar situations should not be treated differently except for legally relevant and clearly justifiable reasons. Precedent promotes judicial restraint and limits a judge's ability to determine the outcome of a case in a way that he or she might choose if there were no precedent. This function of precedent gives it its moral force.
Precedent also enhances efficiency. Reliance on the accumulation of legal rules helps guide judges in their resolution of legal disputes. If judges had to begin the law anew in each case, they would add more time to the adjudicative process and would duplicate their efforts.
The use of precedent has resulted in the publication of law reports that contain case decisions. Lawyers and judges conduct legal research in these reports seeking precedents. They try to determine whether the facts of the present case precisely match previous cases. If so, the application of legal precedent may be clear. If, however, the facts are not exact, prior cases may be distinguished and their precedents discounted.
Though the application of precedent may appear to be mechanical, a simple means of matching facts and rules, it is a more subjective process. Legal rules, embodied in precedents, are generalizations that accentuate the importance of certain facts and discount or ignore others. The application of precedent relies on reasoning by analogy. Analogies can be neither correct nor incorrect but only more or less persuasive. Reasonable persons may come to different yet defensible conclusions about what rule should prevail.
The judicial system maintains great fidelity to the application of precedents. There are times, however, when a court has no precedents to rely on. In these "cases of first impression," a court may have to draw analogies to other areas of the law to justify its decision. Once decided, this decision becomes precedential.
Appellate courts typically create precedent. The U.S. Supreme Court's main function is to settle conflicts over legal rules and to issue decisions that either reaffirm or create precedent. Despite the Supreme Court's reliance on precedent, it will depart from its prior decisions when either historical conditions change or the philosophy of the court undergoes a major shift. The most famous reversal of precedent is brown v. board of education 347 U.S. 483, 74 S. Ct. 686, 98 L. Ed. 873 (1954), in which the Supreme Court repudiated the "separate but equal" doctrine of Plessy v. Ferguson 163 U.S. 537, 16 S. Ct. 1138, 41 L. Ed. 256 (1896). This doctrine had legitimated racial segregation for almost sixty years but finally gave way in Brown, when a unanimous court ruled that separate but equal was a denial of equal protection of the laws.