Legal precedent is an existing legal ruling. Legal precedent comes from case law, or past judicial decisions and cases. Precedent is binding, unless overturned by a higher court.
In the United States, much of the law is made and interpreted by judges. This judicially made law, or common law, is valid unless the legislature overrules it. Case law can involve interpretations of statutes or other legislation, interpretation of the constitution, or decisions on a case in which no statutory law directly implies.
When a judge issues a decision on a case, that case becomes legal precedent. This means that any following cases will follow the precedent set forth in that case. People can look to precedent to guide their behavior, and lawyers can look to precedent to estimate how a case will turn out, and to make arguments for or against a particular legal interpretation.
The United State's Court system has a strong respect for precedent. The legal doctrine of stare decisis dictates that precedent will be followed in future court cases. Stare decisis, a Latin phrase, means "to stand by and adhere to decisions and not disturb what is settled."
There are two types of precedent in the United States: binding and persuasive precedent. Binding precedent is precedent that must be followed. Persuasive precedent refers to interpretations of the law that can suggest a course of action, but that legally do not have to be followed.
When a court within a jurisdiction issues a ruling, it is binding precedent on all other courts within that jurisdiction that are at the same level or lower. For example, if a district court in California issues a ruling on an issue or interprets a law, all California District Courts, and all lower California courts must follow that precedent.
Persuasive authority, on the other hand, refers to an interpretation from a court that is not obligatory. Persuasive authority can come from decisions in another jurisdiction. For example, a Washington court's interpretation of a law is not binding on a California court, but it can be persuasive.
At times, legal precedent can be changed. It can only be changed, however, by a court at the same level that created it, or at a higher level. The Supreme Court, for example, can overrule a district court case, at which point the legal precedent set forth in the district court case is no longer binding.