First Principles of Business Law

6.1. Identifying the ratio decidendi

The decisions that courts make are published in written reports. Typically, the reports of a case are quite long, wide-ranging and complex. If a previously decided case is to be used as a precedent, what part of that decision is binding on the court that is deciding the new case?

The answer is that the ratio decidendi (the reason for the decision) of the earlier court that is binding on the later court. But what exactly is the ratio decidendi of a case? Choose the best answer from those below.

(a) The ratio decidendi consists of that part of the judgment in which the court investigates the law, discusses its development and explains how and why the current rules exist. However the facts of the case play no part in the ratio decidendi.

(b) The ratio decidendi of a case consists of the material facts which define the type of situation being considered by the court; and the particular rule of law which the court has used to resolve the issue raised by those facts.