The Doctrine Of Judicial Precedent And It's Declining Credibility

The article is edited and modified by: Anusha Dharnidharka

KEY TAKEAWAYS:

• Judicial precedents are a widely used source of law that originate from English common law systems.
• Precedents are references made to earlier decisions to make decisions about similar facts, circumstances and issues that arise subsequently.
• It is important, when using precedents as sources of law in decision – making, to differentiate passing comments (obiter dicta) from valid legal points (ratio decidendi) which have a standing in courts of law in future (stare decisis).
• There are ways to avoid precedents used by courts when it is unfavourable to reapply the same principles, such as distinguishing the facts and principles to invalidate the reasoning behind the decision. Other ways include proving that certain laws were misinterpreted or ignored or that the decision was made in such extraordinary circumstances that would make it inapplicable to other cases apart from the one it was made with regards to.
• While the most obvious advantage of using precedents is ensuring there is consistency and high performance of justice system, this method also risks the stagnation of law.

INTRODUCTION

It is the endeavour of any civilized society to have a law, and all its citizens be subjected to this law via the principle of ‘rule of law’. 
Once a law is made by legislature, it is the duty of judges to ensure its uniform application to affect the ‘rule of law’. Precedents are effective accessories that assist judges in performing this duty, and hence are recognised as an important source of law (AIR 1988 SC 1325).
The roots of using judicial precedents as sources and guides for lawyers and other judicial figures can be found in the English legal system. The English legal system follows a common law system, wherein older cases are referred to resolve subsequent issues, and this practice laid the basis for using precedents as sources of law to dictate future decisions.

Despite this, judicial precedents are constantly undermined. The decision in Anil Kumar v/s M K  Aiyappa [2013] 9 S. C. R 869 overreached the precedent set in Karanataka v/s P P Raju AIR 2007 S.C. 3225 by disallowing a magistrate to direct for registration of FIR against public servants without sanctions, owing to limitations in Section 197 of the IPC and Section 19 of the PC Act 1988. Such ignorance of decisions, made by an equal bench, can be seen as a blatant disregard for judicial ethic, discipline, and propriety, undermining the credibility of precedents as sources of law. They also create on judiciary arbitrariness and generate distrust for the judiciary among the public.

To understand why any judiciary must hold precedents so highly, it is imperative to first understand what exactly a precedent is, and why it is so crucial as a source of law.

WHAT IS A PRECEDENT? 

In ordinary terms, ‘precedent’ is the replication of an action that has been done. When we use precedents to solve a problem, we must discern – firstly, if a similar problem has been addressed previously; secondly, if yes, what the degrees of similarity between the two situations are; and finally, if the degree of similarity is high enough, can the principle used formerly be replicated to solve the problem at hand?

Such guidance of precedents helps in achieving consistency and certainty in legal matters and instils a greater sense of caution in the judiciary when making novel principles, in case “it creates precedent,” as per McCormick.

Recognising this importance of precedents, The Government of India Act, 1935, Section 212 provided that the decisions of the Federal Court and the Privy Council would be binding upon all Courts. and Post – independence, the doctrine of precedents received Constitutional recognition under Article 141 of the Constitution, providing that Supreme Court decisions shall be binding on all courts and tribunals within India. 

ELEMENTS OF A CASE:

Every judgment contains four major elements: 

1. Statement of material facts
2. The ratio decidendi/stare decisis – statement of relevant legal principle/s
3. Obiter dicta - discussion of legal principles raised in argument but immaterial to the decision.
4. The decision or verdict   

Ordinarily, courts would only decide on the questions requisite for determining the case presented, but all material questions are open for its decision if it has appropriate jurisdiction; it may even discuss questions which are not essential to the result. For instance, it may determine the constitutionality of a given statute, although it is not instrumental to the case itself, if the issue of constitutionality is involved in the matter and to settle it is in public interest. 

OBITER DICTA:

An expression that is stated by the court in an opinion, but is not necessary to support the decision reached by the court is ‘dictum’ or ‘obiter dictums.’ Mere dicta are not binding under the doctrine of ‘stare decisis,’ but it is frequently a matter of contention whether a certain statement is, indeed, mere dicta. 
This includes personal opinions, views of judges and casual remark made unnecessary to answering the question before court. These are treated as beyond the authoritative or operative ambit of the judgment.

In the case of Arun Kumar Agarwal (AIR 2011 S.C. 3056), the Supreme Court held that in the facts of case, the refusal of the Special Judge’s acceptance of the final closure report which had been submitted by Lokayukta Police was the only ratio decidendi of the Order. The part of the Order regarding the initiation of Challan proceedings must not be treated like direction issued by the Special Judge, and the wordings of the Order corresponding to the Challan suggest that it lacks command, authoritative instruction, clarity and relevant addressal of an authority to instruct. To conclude, this part of the Order is the ’Obiter Dictum.’

RATIO DECIDENDI AND STARE DECISIS:

In the application of the stare decisis doctrine, a distinction is made between a ‘holding’ and a ‘dictum.’ This distinguishment is important: the question actually before court is scrutinised extensively and discerned with care, while other principles are not as much (American Jurisprudence 2d Vol. 20, at page 437).  Therefore, only the relevant legal principle on which the case depends, known as the ratio decidendi, that is binding on subsequent courts.

Apart from obiter statements, the winning or losing party is irrelevant too. We must only concern ourselves with the ratio decidendi. In the words of the Supreme Court, “A decision is binding not because of its conclusion but in regard to its ratio and the principle laid down therein.” 

The principle of stare decisis can be broken down into two components:

1. A decision made by a higher court is binding precedent which cannot be departed from by any lower court.
2. The advisory principle that a court should not overturn precedents that it sets itself, except if it has convincing reasons to do so and may be guided by principles from lateral and lower courts. 

To simplify, under the doctrine of stare decisis, decisions of higher courts belonging to the same provincial jurisdiction have a binding authority on a lower court within that jurisdiction. The decision made by any court of a separate jurisdiction is only persuasive authority. 

The degree of persuasiveness dependents upon multiple factors, which include:

• The nature of the other jurisdiction.
• Where the court which decided the precedent case in the other jurisdiction falls in the judicial hierarchy.
• The date on which the precedent – setting case was decided, assuming that a more recent case has better applicability and appropriateness, therefore being better authority for the case at hand.
• Occasionally, the judge’s reputation (Glanville Williams in Learning the Law (9th ed. 1973)).

The value of precedents arises from the stare decisis principle, stating that cases must be decided the same way when their material facts are the same. We know that in the flux of life exact facts of a case will never recur, but the legally material facts may do so, and that is when the ratio can be reused.

RATIO AND STARE DECISIS IN PRACTICE:

Suppose that in a certain case, parties A, B and C. The court finds that fact B and fact C are material, whereas A is immaterial, and then reaches conclusion X (e.g., judgment for the plaintiff, or judgment for the defendant). The precedent doctrine establishes that in any future case wherein facts B and C exist, or wherein all three facts exist, the conclusion must be X. 
If in a future case all three facts, as well as an additional fact D exist, and fact D is deemed material, the first case will not be a direct authority as the novel fact has added a new dimension worthy of deliberation, though it may be of value as an analogy. 

All jurisdictions must have an apex court to declare what the law is in a precedent-setting case for the doctrine of stare decisis to remain effective. In India, this is the Supreme Court of India, which resolves conflicting interpretations of law, and hence whatever this court decides becomes judicial precedent. Thus, it is necessary to always ascertain the legal rationale of any Supreme Court judgment. 

When it comes to High Courts, their decisions have binding effect within the State and persuasive effect on courts of other States. As general rule a decision of a larger Bench prevails over the decision rendered by a smaller Bench. Hence, when the High Court is faced with difference between its own judges in two separate decisions with two distinct precedents set in each, the correct pathway is to refer the issue to the larger Bench. 

A frequent difficulty faced by the Courts arises when two decisions arise from Benches of the same number of Judges, and the two decisions cannot be reconciled. The traditional view had been that the later decision will have binding effect as it is presumed that the earlier view was implicitly overruled. The more recent view is that the decision preferred is one which is better on the point of law, rationalizing that the later view has a more evolved and relevant decision. 
However, recently, this above line of reasoning has been questioned. It is much preferred now, if there is a conflict between two ratios, to use as precedent the decision which is better on the point of law, regardless of its occurrence in time.

An excerpt view from the Constitutional Law of India: A Critical Commentary by Hormasji Maneckji Seervai says, "But judgment of the Supreme Court, which cannot stand together, present a serious problem to the High Courts and subordinate Courts. It is submitted that in such circumstances the correct thing is to follow that judgment which appears to the Court to state the law accurately or more accurately than the other conflicting judgment."

CIRCUMSTANCES THAT MITIGATE THE FORMAL BINDING AUTHORITY OF PRECEDENTS.  

1.    ABROGATED DECISIONS: 
A decision is no longer considered binding if the statute or statutory rule associated to it is reversed/overruled by a higher court, or if one that is inconsistent with it is subsequently enacted.

2.    IGNORANCE OF STATUTE: 
A precedent is not considered binding if it had ignored a statutory provision or a rule having statutory force (delegated legislation). Such decisions are ‘per incuriam’ and therefore, not binding. However, the mere fact that the earlier court misconstrued a statute or ignored a rule is no ground for impugning the authority of precedent – a precedent loses its binding force only if the court that decided it overlooked an inconsistent decision of a higher court. A court cannot become bound by a decision of its own that conflicts with another. If there are previously inconsistent decisions of its own, the court is free to follow either i.e., the earlier or later decision. 
To fall within the category of per incuriam, it must be shown not only that one of the decisions involved some significant error or misstep, but also that allowing the decision to remain standing would be likely, inter alia, produce serious inconvenience in the administration of justice. 

-    Sibbia's case (1980 AIR 1632):
The decisions of the Court in the cases of Salauddin Abdulsamad Shaikh v. State of Maharashtra (1996) 1 SCC 667, K. L. Verma v. State and Another (1998) 9 SCC 348, Adri Dharan Das v. State of West Bengal (2005) 4 SCC 303 and Sunita Devi v. State of Bihar and Another (2005) 1 SCC 608 conflict with the decision of the Constitutional Bench in Sibbia's case. It was submitted that all these orders, which are contrary to the clear legislative intention of law as laid down in Sibbia's case, are per incuriam. Additionally, it was also submitted that if any conflict between two views was irreconcilable, the court necessarily had to follow the judgment of the Constitutional Bench over the subsequent decisions of Benches of lesser strength. He relied on N. Meera Rani v. Government of Tamil Nadu and Another (1989) 4 SCC 418, wherein it was perceived by Courts that when there was a clear conflict between the judgment of the Constitutional Bench and subsequent decisions of Benches of lesser strength, the dictum in the judgment of the Constitutional Bench must be preferred over the subsequent decisions.  He also placed reliance upon Union of India and Others v. K. S. Subramanian (1976) 3 SCC 677 and State of U.P. v. Ram Chandra Trivedi (1976) 4 SCC 52 and submitted that in case of conflict, the High Court must prefer the decision of a larger Bench to that of a smaller Bench.  
Mr. Jethmalani submitted that the decision in Sibbia's case must be followed on account of the larger strength of the Bench that delivered it, and further said that any following decisions are per incuriam, and cannot bind any subsequent courts as it ignored the ratio of the judgment of the Constitutional Bench.  
Upon perusing the judgments in the cases of Salauddin Abdulsamad Shaikh v. State of Maharashtra, K. L. Verma v. State and Another, Adri Dharan Das v. State of West Bengal and Sunita Devi v. State of Bihar and Another laid down in paragraph 42 that the normal rule is not to limit operation of the order of anticipatory bail, and that this was ignored by courts passing the subsequent judgments. In these circumstances, the observations made in the subsequent judgments must be construed to be per incuriam and the decision of the Constitutional Bench must be preferred instead. 
He further submitted later, when the said issue came up for consideration before the Madras High Court reported in Palanikumar and Another v. State 2007 (4) CTC 1, that the subsequent judgments were in conflict with the decision of the Constitutional Bench in Sibbia's case (supra) and in accordance with the law of precedents, the judgment of the Constitutional Bench is binding on all courts and the ratio of that judgment has to be applicable (Sissharam S Mehetra v/s State 2010 SC).
In State of Bihar v. Kalika Kuer and Kalika Singh and others (AIR 2003 SC 2443), Court held that when an earlier decision seemed to be faulty to a Bench of a coordinate jurisdiction considering the question later, under the belief that a possible aspect of the matter was omitted by or not brough to the attention of the earlier Court, or more aspects should have been considered by the Court when deciding the matter earlier, it would still be insufficient to claim that the decision was made per incuriam. The earlier judgment may seemingly be erranious, yet it will have a binding effect on the latter bench of coordinate jurisdiction. The Court held that the matter will have to be resolved in one of two ways – either by following the earlier decision or by referring the matter to a larger Bench to examine the issue if it is felt that earlier decision is not correct (GL Batra v/s Haryana 2013 SC).

3.    SUB SILENTIO:
Decisions are called sub silentio when a point of law involved in decision is not considered by the court or presented to its mind. E.g., a sub silentio decision would entail when a decision is on point A, upon which judgement is pronounced, but there was another point B, on which also court ought to have pronounced before deciding the issue but did not. So here, although point B was logically involved in the facts and although the case had a specific outcome, point B is said to pass sub silentio (such as in Gerard v/s Worth of Pipers Ltd (1936) 2 All. E R 905(A)). 
Where a judgement is given without adequate representation of the losing parties, it is not guaranteed that all the relevant consideration has been brought to the notice of the court and therefore, the decision cannot be awarded absolute authority. 
A precedent is not destroyed merely because it was badly argued, inadequately considered, and fallaciously reasoned. Only the total absence of argument vitiates the precedent. 
Furthermore, a decision is an authority only for what it actually decides and not for what may imply, so decision on a question which has not been argued cannot be treated as precedent. 
The case of M/s. Goodyear India Ltd. v. State of Haryana and another (AIR 1990 SC 781) exemplifies when observation of the court led to a question about the binding force of a precedent wherein the validity of a statutory provision was neither raised, nor argued. 

4.    DISTINGUISHING: 
Previous cases only bind later cases if the legal principles involved are the same and the facts are similar. “Distinguishing” is a means used by judges to overreach the an earlier inconvenient decision which is, on the face of it, binding upon them. They apply this device to either, the facts, or the principles of the case. 
Generally, if a Court deems fit to follow a precedent of a superior court, they try to find out and follow the opinions expressed by larger benches of Superior Court in the precedent setting case. If, however, the Court was of opinion that the views expressed by larger benches of this Court were not applicable to the facts of the instant case, it should say so giving reasons supporting its point of view, thereby ‘distinguishing’ the two cases (Union of India and another v. K.S. Subramanian, AIR 1976 SC 2433).
The Apex Court is bound by its earlier decisions, so it is only when the Supreme Court finds itself unable to accept the earlier view due to discrepancies of fact that it shall justify deciding the matter in a different way (Income Tax Officer, Tuticorin v. T.S. Devinatha Nadar etc., AIR 1968 SC 623).

5.    OVERRULING: 
Higher courts can overrule a decision made previously by lower courts, e.g., the Court of Appeal can overrule an earlier High Court decision. 
Overruling can occur on incorrect application of law by the previous court, or because the later court considers that the rule of law contained in the previous ratio decidendi is no longer suitable. The overruling is retrospective, except for matters that are res judicata. 
Superior courts cannot allow itself to become captive of a view which, in due course, has been found to be patently erroneous, manifestly unreasonable, cause hardship, result in plain iniquity or create public inconvenience. The Court must keep balance between need for certainty and consistency, and the desirability of growth and development of law 
It may perhaps be laid down as a broad proposition that a view which has been accepted for a long period of time should not be disturbed unless the Court can say positively that it was wrong, unreasonable, redundant or that it is productive of public hardship or inconvenience (AIR 1974 SC 2009)

PRINCIPLES OF PROSPECTIVE OVERRULING 

Prospective overruling implies that an earlier decision of the same issue remains undisturbed till the date of the later judgement, so a decision that is dissimilar to that made for a previous case will have no retrospective effect on that case. It guarantees the relief claimed to meet the justice of the past cases, while maintaining that the updated and applicable law is available to any future cases. Frequently such situations arise in service matters or tax matters, wherein a person is already appointed upon interpretation of a law by the Apex Court in its earlier judgment, but such interpretation is overruled in the later judgement. Prospective ruling allows the person to continue his work and the tax already imposed and collected is not directed to be refunded. 
Laws declared by Supreme Court are prescribed lawful force from the date of inception and retrospective overruling is only an exception when the Supreme Court itself makes states the retrospective application to render complete justice to the parties or to avoid chaos. It is therefore necessary in retrospective overruling that this is declared succinctly in the judgment when it is delivered (M.A.Murthy v/s State of Karnataka (2003) 7 SCC 517). If Supreme Court does not exercise such discretion and it only operates prospectively, the High Court cannot exercise this discretion itself.                                        

6.    REVERSING:
Reversing is the overturning of a decision of the court below that hearing the appeal on appeal by a higher court. The appeal court will then substitute the reversed decision with its own decision.  

7.    CONCESSION:
A concession made by counsel on a question of law is not binding as precedent (State of Rajasthan v/s Mahaveer Oil Industries (1999) 4 SCC 357).

8.    CONSENT: 
When a direction or order is made by consent of the parties involved, the Court does not adjudicate upon the rights of the parties, nor lay down any principle (Municipal Corporation of Delhi v. Gurnam Kaur, AIR 1989 SC 38). Therefore, such decisions are not binding precedent.

9.    NON-SPEAKING ORDER: 
Non – speaking orders dismissing special leave petitions would not constitute binding precedent. To lay down a law, that court must give reasons for reaching conclusion, and if the judgment of courts does not comply with the requirement of statutory provisions as laid down in the Cr.P.C., the court ought not to have given such cryptic judgment. In fact, it is considered no judgment in eye of laws, hence being unusable as precedent (Premkumar v/s State of Punjab 2013 Cr.L.J. 2973).

10.    SPECIFIC EXCLUSION:
A judgment that itself states that the ratio it lays down shall not be binding precedent, shall not be followed or relied upon cannot be treated as binding precedent (Kendriya Vidyalaya Sangathan v/s Ram Ratan Yadav(2003) 3 SCC 437).

11.    ON FACTS: 
If a judgment is rendered merely factual, it could not be declaration of law within meaning of Article 141 (UP State Brassware Corp. Ltd v/s Uday Narain Pandey AIR 2006 SC 586).

12.    NON-CONSIDERATION FOR FOREIGN DECISIONS:
The constitutional bench does not consider precedents based in foreign jurisdictions, although they may be used as viable guides for decision – making. 

ADVANTAGES AND DISADVANTAGES OF JUDICIAL PRECEDENTS AS SOURCES OF LAW:

There are both advantages and disadvantages of precedents in deciding cases.

ADVANTAGES:

The most significant advantage is the element of consistency and certainty that is brought in with precedents. Similar cases must be decided similarly to avoid inconsistency, becoming the hallmark of a good decision – making process. It may also allow persons to plan and come to settlements with a confidence. 

The judge must also maintain impartiality to deliver the interests of justice. Using precedents, the Judges have clear cases to follow, because of its binding force (unless clearly distinguishable). Any desperate attempts to distinguish an identical case would be obvious, hence this method ensures impartiality from the judge. 

Case law is practical in character, based on the actuality of cases brought before the courts instead of logical and theoretical deductions. Case laws are applied and tested statute law in conjunction with rules and principles are derived from everyday life, testing effectively and be intelligibility. Discards ambiguity, enabling to lower courts the ease to follow decisions of higher courts unanimously. 

The making of law in decided cases also offers opportunities for growth and legal development, which could not be provided by Parliament without a nudge from precedents. The courts can assess past decisions and quickly lay down new principles or extend old principles to meet novel circumstances, such has been exhibited in the wealth of cases illustrating numerous principles of English law that has built up over time. 
The hierarchy of the courts also ensures that lower courts follow higher courts in an orderly development of law, making it convenient and timesaving. If a problem has already been answered, it is natural to reach the same conclusion by applying the same principle, saving unnecessary litigation. 

The existence of a precedent may prevent a judge making a mistake that he might have made if he had been left on his own without any guidance, and therefore serve the interests of justice. It would also be unjust to reach a different decision in a similarly situated case. 

DISADVANTAGES:

The most evident disadvantage precedents are the formation of rigidity on the development of law. The doctrine of stare decisis is prohibits the growth of law that is made by judges. 

The cases exemplify the law in detail, therein lies another weakness of case law. It is in bulk, and its complexity makes it increasingly difficult to find the most appropriate law. The overload of cases make it is hard for judges to find relevant cases and extract clarified reasoning. 

Furthermore, application of precedential value must be exercised with great caution, such that prevents it to degenerate into a mere mechanical exercise performed without thought. Judicial mistakes of the past are perpetuated unless bad decisions happen to come before the court of appeal for reconsideration. 

A system that was truly flexible could not simultaneously be very certain because no one can predict when and how legal development will take place.

Lastly, the advantage of certainty is lost where there is a surplus of cases, causing confusion. The overruling of an earlier case may cause injustice to those who have relied upon it to organise and plan their affairs. While it may produce just results to a specific case, it may not do so on broader application to many cases. It would be undesirable to treat several claimants unjustly simply because one binding case had laid down an unjust rule. 

CONCLUSION:

Lord Halsbury has said that there is more to the law than being a mechanical process of logical deduction. It is obvious that the Judge, in every case, must decide for himself which of the circumstances of the proposed precedent are applicable to his decision. Once he has decided which principle to apply, he must logically deduct the most appropriate manner to apply the precedential principle to the instant case. There cannot be a principle which imposes itself on every subsequent case or an inescapable logical deduction. 
Generally, there is a choice, as explained by Chandrachud, C.J. in Deena v. Union of India (1983) 4 SCC 645, “Any case, even a locus classicus, is an authority for what it decides. It is permissible to extend the ratio of a decision to cases involving identical situations, factual and legal, but care must be taken to see that this is not done mechanically, that is, without a close examination of the rationale of the decision cited as a precedent.” 
However, it must be conceded that stare decisis is only a part of this topic, and there is much more to this discussion. There are interpretive rules for statutes, unique considerations which must be taken into account when principles of the law of equity are involved, and problems caused by the evidentiary rules of onus of proof when it comes to making a judicial decision. 
Yet, while the variety of rules equip lawyers with choice of other strategies for legal reasoning and argument, it also must be conceded that stare decisis continues to play the crucial role. The great American judge, Oliver Wendell Holmes Jnr said, “The life of the Law has not been logic; it has been experience.” 
It can be concluded that for an organized and orderly development of law, the precedential method is vital. 

FAQ’s

1.    Are all precedents binding?
Not all precedents are binding. While the decisions made by higher courts are always binding on a lower court, there can be precedents that are no more than persuasive. Persuasive precedents come from courts that are equal to the one where the case has been presented, of foreign jurisdictions, or even lower courts. Such precedents do not obligate the court to apply the same principles to reach their decision, but simply offer a useful piece of guidance that can help the court if it chooses to consider it. This is useful to help judges reach decisions that may need certain degrees of variance and adjustments at the judge’s assessment and discretion, but also need a nudge in the right direction for the judge to make this assessment.

2.    Can lower courts challenge a precedent by a higher court?
Per se, lower courts cannot challenge the precedents that a higher court in the same jurisdiction has set. There are, however, some methods that the lower court may employ when it wishes to avoid a precedent. The most common method of doing this is ‘distinguishing’ the case. Herein, the lower court must prove that the circumstantial differences are so significant that deciding on the same line of reasoning would fail the delivery of justice. They must establish sufficient difference to show that the factual background of both cases makes the two completely different, and hence the same principle cannot be used to decide both cases; each deserves separate judicial scrutiny. If the instant case is distinguished appropriately, and material differences are pointed out, it invalidates mechanic application of the decision in the precedent – setting case. It is also possible that, despite having no authority to challenge the precedent, the lower court does so, knowing that it will then be referred to a higher court upon appeal. Such court may have authority to reanalyse the precedent, thereby modifying it when appropriate.

3.    Can precedents be used in jurisdictions that are not common law jurisdictions?
In common law systems, precedents arise from the case laws that define the legal framework of that jurisdiction. Any decisions must follow this framework in its judicial process. Out of common law systems, while the precedent may lose its authoritative force to an extent, it may still serve as a handy guide for courts to make references to in their judicial decision – making process. In civil law systems, the precedents from previous cases are not outright binding on lower courts and subsequent cases, but a judge is free to refer to these past precedent – setting cases to ascertain a tested and useful methodology to resolve the issue at hand. These are most useful when the courts are dealing with new statutes and need reference to interpret them properly. Hence, it can be said that while precedents certainly have a more extensive role to play in common law systems, they are a resourceful tool to resort to when and as required by other legal systems as well.

4.    How do courts ascertain whether they should follow or distinguish a precedent?
The decision to follow a legal precedent can be determined by four considerations: the factual background of the cases, the legal principles involved in the cases, the contextual framework of both cases, and the legal intent of resolving both the cases.
Firstly, the facts of both the cases must closely resemble each other so that it validates the application of precedents. Material differences in facts may render the precedent inapplicable, as the court can distinguish the two cases from one another.
Then, the legal principles of the precedent – setting case must be evaluated. The evaluation involves checking the relevance of the rule used previously to the current case. If the issue is similar and hence the rule is too, the precedent is likely to apply. If the precedent was used for a case such that it was intended to have a very narrow or specific scope, perhaps only limited to that very case, the precedent may be futile.
It is key to place the legal rule set in the past into the current context, or else the system of precedents will fossilise redundant law and bar any evolution of law. The principle must be weighed against the adaptation of societal values over time, and hence, if the precedent was set long ago, it is likely to not reflect what the society stands for anymore.
Lastly, judges may have to ascertain what the original intention of the Bench was when the decision was made in the precedent – setting case. It is important to ask if the Bench had intended for their decision to set a precedent that applies to the current case and eventuates the result it would.

5.    How is a new precedent established by courts?
Generally, precedents are set when the court of law hears a novel case or a case in a very novel context, such as after the establishment of new or amended statute.
Since the novel case would have no previous precedent, it requires brand new consideration, such that this new consideration itself sets a precedent. The court may outright find the case and circumstances novel or be able to reach this conclusion post distinguishing it from previous precedent – setting cases. Courts also consider modern policy and societal contexts that may render updated precedents formulating out of a new legal intent, hence modernizing the law to remain relevant to present – day society. Once a new legal principle or rule has been set by a higher court in such manner, it is binding upon lower courts of the same jurisdiction under sufficiently similar circumstances. If done so by a lower court, it lacks formal authority, but may still exist as a persuasive precedent. As the precedent ages, it gets incorporated into the legal standards and legal framework of that jurisdiction, setting expectations of the followers of law in that system, and being a frequent point of reference to courts by lawyers.