To further understand the doctrine of binding precedent it must also be noted that there are potentially two elements of law within a precedent. It is not the decision in a case, which is binding, but rather the rule of law on which the decision was based on. This element is known as the ratio decidendi. A decision of a court will usually contains numerous elements: finding of material facts, statements of the rule of law applicable to the legal problem, and a judgement based on the combined effects of the first two. It is the statement of the rule of law in a case, which becomes the ratio decidendi.
Thus the ratio decidendi may be described as the statement of the principles of law applied to the legal problems raised by the facts as found upon which the decision is made. This in turn leads to another crucial distinction. Not every statement of law in a judgement is binding. Only a statement, which is based upon the facts as found and upon which the decision is based will be binding. Any other statement of law is, strictly, surplus and is described as obiter dictum. A statement of law is regarded as obiter dictum if it is based on facts which either were not found to exist, or, if found, were not found to be material.
On the other hand, there is a possibility for dictum to form a precedent. A good example of a highly influential dictum is the statement of Lord Atkin in Donoghue v Stevenson9 where he attempted to lay down a general test for determining when a duty of care arises in the tort of negligence. His dictum has become known as the 'neighbour test' and was expressed in these words: "You must take reasonable care to avoid acts or omissions which you can reasonably foresee would be likely to injure your neighbour. Who, then, in law is my neighbour?
The answer seems to be-persons who are so closely and directly affected by my act that I ought reasonably to have them in contemplation as being so affected when I am directing my mind to the acts or omissions which are called in question. " This dictum, though clearly obiter, has been adopted in subsequent cases, for example The Dorset Yacht case. Another example where obiter dicta have formed law is in the case of Central London Property Trust Ltd. V High Trees House Ltd10 and Pinnel's Case. 11 Judicial precedent has numerous advantages.
The operation of judicial precedent allows for development of the law. But the basic purpose of the rule of law is to provide consistency and certainty. Precedent brings consistency to the English legal system, in that two cases with similar material facts will be treated in the same manner. No legal system can be perceived as fair unless everyone receives equal treatment. Predictability allows lawyers to advice their clients with some degree of certainty. Certainty is an important advantage of the existence of precedent.
A judge may be prevented from making a mistake, which he or she might have made if there were not any guidance available. Another initial advantage of precedent is its convenient timesaving device. If a problem has already arisen and been solved in a certain way it is easy to reach the same conclusion without too much reconsideration. However some may feel that treating two cases alike doesn't allow for much freedom and rigidity is formed, inhibiting the development of the law and, therefore giving the impression that the law of precedent is strict and inflexible.
But there are various ways in which a judge may avoid following a previous decision. A judge may be able to distinguish an earlier case from the present case on its facts and, thus avoid following it. No two cases will ever be identical in every way. The cases of Jordan12 and Smith13 illustrate a 'real life' example of distinguishing two separate cases from one another. They may seem at first to be alike in many ways, but when the facts are investigated fully, it becomes obvious that they are actually different. This indicates that separate precedents would need to be used.
A judge could avoid using a precedent because he or she found the ratio too obscure or the previous decision was per incuriam i. e. 'by mistake and without all the facts'. Reversing occurs where a court higher up in the hierarchy overturns the decision of a lower court on appeal in the same case. As it was mentioned before the House of Lords has since 1966 indicated that it is actually prepared not follow its previous decisions if they feel that injustice will occur or there will be unreasonable restriction of the development of the law.
The court will choose which decision to follow if there are two conflicting decisions and will not follow one of its own decisions if it is inconsistent with a decision of the House of Lords or the Privacy. The case of Miliangos v George Frank (Textiles) Ltd14 shows that a judge can actually avoid using a precedent it can be seen that the law of precedent isn't as strict and inflexible as the title and some people's opinions may suggest. However some judges, particularly in the House of Lords, have been, at times, and to a certain extent still are – holding decisions to be wrong, but not refusing to overrule them.
They are very strict in their adherence to stare decisis. Judges do not care whether a decision is 'right' or 'wrong', just or unjust. This can be seen as a big disadvantage, from one side, as it means that judges have too much power at times and a bad precedent can be ignored which would make the law strict and inflexible. Once a court, high enough in the hierarchy has established a principle, it is very difficult to remove or alter that principle.
On the other hand, the overruling of an earlier case may cause injustice to those who have ordered their affairs in reliance on it. Precedent may produce justice in the individual case but injustice in the majority of cases. It would be undesirable to treat a number of claimants unjustly simply because one binding case had laid down an unjust rule15. Changes in society can also show that the doctrine of judicial precedent can be very resistant to satisfy the needs of society. Thus, the principle once been appropriate may have become very unsuitable in the modern society.
For example, the courts in the case of Priestly v Fowler16 had developed a doctrine of 'common employment'. This meant that when "an injury to one servant was caused by another servant of the same master, the master would not be liable in damages to the injured servant, although the other servant would be". The doctrine relevant in the condition of the domestic employment hundred years ago, when the number of servants was not great in contrast with modern factory employment, where the number could reach thousands employees.
Because of the doctrine 'common employment' it took 61 years to modify the law of employment on this issue. In the case of Groves v Wimborne17 it was held the principle was inapplicable if there was a breach of statutory duty by the employer18. There is another example; the case of R v R19 which is about the possibility of the rape within marriage has been recently decided given its long history. In R v R the House of Lords held that a person could be guilty of raping his wife, previously it could not be rape because it was assumed that a wife consented.
As this was the first time the law had been decided this way it set a new precedent for the future. The decision was appealed but both the Court of Appeal and the House of Lords agreed so it is binding on all courts. From these examples it is clearly seen that the principles cannot be regarded as rigid as some people might think and that they can develop in order to meet contemporary needs. One of the earliest statements on the justification of this doctrine was made by Parke J in Mirehouse v Rennell20 (1833)) when he stated:
"Our common-law system consists in the applying to new combinations of circumstances those rules of law which we derive from legal principles and judicial precedent; and for the sake of attaining uniformity, consistency and certainty, we must apply those rules, where they are not plainly unreasonable and inconvenient, to all cases which arise; and we are not at liberty to reject them, and to abandon all analogy to them, in those to which they have not been judicially applied, because we think that the rules are not as convenient and reasonable as we ourselves could have devised.
" It was emphasised by the Court of Appeal in R v Simpson21. The doctrine does, however, retain some element of flexibility, and this is best described by two principles: first, that superior courts have power to overrule decisions of inferior courts and, in certain cases, to overrule their own earlier decisions, as it was mentioned before when the courts hierarchy had been considered, and secondly, that any rule of law may be changed by statute. In any event, flexibility, certainty and consistency are incompatible features of judge-made law.
In Search of Justice22 it has been noted that 'the more predictable the law attempts to become the less it can be adjusted to changing circumstances'23. A system that was truly flexible could not at the same time be certain because no one can predict when and how legal development will take place. It is actually up to individual judges; they could protect stability or keep law 'abreast with changing times'24A further disadvantage that has to be considered is unconstitutionality. It concerns with the fact that judiciary make law rather than restricting themselves to the role simply applying it25.