First Principles of Business Law

1.1. The importance of previous decisions

When judges hear a new case, they routinely refer to and take account of similar cases that have been decided in the past. They use these previous decisions as a guide or 'precedent'. The earlier case shows what rules should be applied to decide cases of this kind. Past cases are therefore a source of law. We refer to this type of law as 'case law' to distinguish it from other kinds of law such as legislation.

If you have a legal question to deal with, and you wish to use decided cases as precedents, you will find the process quite complicated. Some important questions are:

• Which of the many previously decided cases are relevant?
• What part of a previously decided case should be followed ?
• How do you decide what a previously decided case is saying about the law?
• When might a court properly decide not to follow a previously decided case?

This module will help you to answer these questions and learn how to use case law properly.