The doctrine of binding precedent or stare decisis is central to the English legal system, and to the legal systems that derived from it such as those of Australia, Canada, Hong Kong, Pakistan, Singapore and New Zealand.
A precedent is a statement made of the law by a Judge in deciding a case. The doctrine, states that within the hierarchy of the English courts a decision by a higher court will be binding on lower courts. This means that when judges try cases they will check to see if similar cases have come before a court previously. If there was a precedent set by an equal or higher court, then a judge should follow that precedent. If there’s a precedent set in a lower court, a judge doesn’t have to follow it, but may consider it. The House of Lords however doesn’t have to follow its own precedents.
Only the statements of law are binding.
This is known as the reason for the decision or ratio decidendi. All other reasons are “by the way” or obiter dictum. See Rondel v. Worsley  1 AC 191. A precedent doesn’t bind a court if it finds there was a lack of care in the original “per incuriam”. For example, if a statutory provision or precedent had not been brought to the previous court’s attention before its decision, the precedent would not be binding. Also, if a court finds a material difference between cases then it can choose not to be bound by the precedent. Persuasive precedents are those that have been set by courts lower in the hierarchy. They may be persuasive, but are not binding. Most importantly, precedents can be overruled by a subsequent decision by a higher court or by an Act of Parliament.
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