Different legal systems treat judicial precedents as either evidence of law or as sources of law.
Roman Law, and systems of law based on it, treat legal precedent as having nothing more than high persuasive value. They are treated as belonging to the same category as expert legal opinion: they are not authoritative and Courts are not bound by them.
However, in the Common Law system, precedents have far more value – Common Law has itself been created by the decisions of judges. They are authoritative and Courts are bound to follow them.
There are thus two theories with regard to precedents: the first is that reported decisions can be cited by lawyer and may be followed by Courts and the second is that precedents are authoritative and will be followed by Courts.
There has been much debate about whether or not precedents should be treated as being binding. The arguments in favour of treating precedents as being binding are that they ensure uniformity and predictability in the application of law while the argument against the binding authority of precedents is that they make the law far too rigid and difficult to reform.
There are safeguards to ensure that precedents do not become too rigid though:
1. A higher Court can always reverse the decision of any of its subordinate courts
2. A Court need not follow a precedent established by another Court of co-ordinate jurisdiction e.g. one High Court need not follow a precedent established by another High Court
3. Any Court can cast aside a precedent by ‘restrictively distinguishing’ it i.e. by limiting its application to the case which established it by saying that it is limited to that case because of its peculiar facts.
There is also a theory called the Declaratory Theory which states that Common Law is customary law but case law is not – precedents are merely declaratory in nature. As such, they do not create law and all decisions are nothing more than statements of existing law.
The Declaratory Theory obviously never held sway in the Court of Chancery – the history of the Court was too well known for anyone even to be able to pretend that the principles of equity which it applied originated wither in custom or in statute.
Reference: Salmond on Jurisprudence