In the modern legal system, the term precedent refers to a rule, or principle of law, that has been established by a previous ruling by a court of higher authority, such as an appeals court, or a supreme court. Courts in the U.S. legal system place a high value on making judgements based on consistent rules in similar cases. In such a system, cases based on similar facts have a fair and predictable outcome. To explore this concept, consider the following precedent definition.

Definition of Precedent


  1. A legal decision made by a court of authority, which serves as an authoritative rule in future, similar cases.
  2. A rule of law established by a higher court that is subsequently referred to in deciding similar cases.


1350-1400        Late Middle English

What is Legal Precedent

Legal precedent means that a decision on a certain principle or question of law has already been made by a court of higher authority, such as an appeals or supreme court. Following such a decision, lower courts defer to, or adhere to, that prior decision in similar cases. The decisions of lower courts may be used as precedent for courts of similar jurisdiction, but higher courts are not bound by the decisions of lower courts.

In the U.S. legal system, there is a principle that compels judges to respect the precedent established by prior decisions on similar cases. This principle is known as “stare decisis” (Latin). This means that courts should adhere to precedent, and not stir the pot on matters already settled.

Binding Precedent

The use of legal precedent helps ensure court rulings remain consistent among similar cases. To this end, courts are bound to adhere to prior decisions made by a higher court on a similar legal matter. Because a judge is bound by these previously made decisions, this is referred to as binding precedent. Again, following the principle of stare decisis, binding precedent promotes the maintenance of answers to legal questions already established.

Decisions made by a low-level court do not become binding precedent on courts of higher jurisdiction. Because of this, binding precedent is usually the result of decisions made at the appellate court or supreme court level, though it may apply to decisions made by courts of even, or horizontal, jurisdiction. Binding precedent applies only among courts of the same system, such as a state court hierarchy. Legal precedent set in the federal court system is not generally binding on any state court, though it is commonly used as persuasive precedent.

For example:

The state court of Alabama rules in a civil lawsuit that a photographer must refund the entire amount charged to a client for a photo shoot, if the client is unhappy with any of the photos. If the photographer appeals the matter to a higher court, the appeals court has no obligation to defer to the lower court’s decision. In other words, the lower court’s decision is not binding precedent.

Persuasive Precedent

Also referred to as “persuasive authority,” persuasive precedent is a source of law that comes from prior decisions made by lower courts, courts of even authority, foreign courts, or non-critical statements made by a court during a judgment about hypothetical facts. It is not uncommon for judges to refer to statements made as persuasive precedent in making a decision on a case, using them as guidance. Unlike binding precedent, however, the court has no requirement to use persuasive precedent in making a ruling.

What is Obiter dictum

The Latin term obiter dictum translates as “by the way,” and refers to certain statements or comments made by a court in making a case ruling, that are about an issue or fact that is not critical to the decision. While such statements do not become binding precedent, they may be used to gain an insight into how and why the judge reached the decision in the case. This type of rationale may become persuasive precedent, used to guide judges in deciding similar cases in the future.

Precedent in a Court of Appeals

Although decisions made by a court of appeals is binding on lower courts within the same hierarchy, they are not necessarily binding on decisions made by other appellate court cases. Even though it is not required, however, precedent is usually followed, unless the judge on an appeal believes there is an important reason to make a different ruling. In such a case, the court’s new ruling may become binding precedent.

Precedent Set by Walgreen Appeal

In 2014, an Indiana woman sued Walgreen Co., a national pharmacy chain, for violating her rights under the Health Insurance Portability and Accountability Act (HIPAA). The case revolves around the release of her personal prescription information to her ex-boyfriend, who was involved with one of Walgreen’s pharmacists at the time. A jury decided in favor of the plaintiff, awarding her $1.4 million in damages.

Walgreen appealed the case on several grounds, but the appellate court found no reversible error, finding that the pharmacist had breached a sacred duty to maintain patient confidentiality. The court ruled against Walgreen, stating, “We are loath to disturb jury verdicts and decline to do so in this case.” This case of Walgreen Co. v. Abigail E. Hinchy, 49A02-1311-CT-950 became the first published court decision holding a healthcare provider liable for violations under HIPAA.

Following the appeals court ruling, the Plaintiff’s attorney noted, “By choosing to appeal, Walgreen has now created a precedent – one which may be used and relied upon by courts throughout the nation – confirming that privacy breach victims may hold employers accountable for the HIPAA violations of their employees.” As this decision was made at a state appellate court level, it becomes binding precedent on all lower courts in the state of Indiana. It is likely, however, that this precedent will be used as persuasive precedent in other court systems.

Related Legal Terms and Issues

  • Appeals Court – A court having jurisdiction to review decisions of a trial-level or other lower court.
  • Jurisdiction – The legal authority to hear legal cases and make judgments; the geographical region of authority to enforce justice.

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