Precedent in law is an adjudged case or decision of a court of justice, considered as furnishing a rule or authority for the determination of an identical or similar case afterwards arising or of a similar question of law. The only theory on which it is possible for one decision to be an authority for another is that the facts are alike; or, if the facts are different, that the principle which governed the first case is applicable to the variant facts.

Additionally, precedent is a judicial decision that contains in itself a principle. The underlying principle which thus forms its authoritative element is often termed the ratio decidendi. The concrete decision is binding between the parties to it, but it is the abstract ratio decidendi which alone has the force of law as regards the world at large.

Binding Precedent: A precedent which a court must follow. For example, a lower court is bound by an applicable holding of a higher court in the same jurisdiction. It is constitutionally provided under article 129(3) of the Constitution of the Republic of Ghana that decisions of the Supreme Court based on the question of law are binding on all other courts.

Persuasive Precedent: A precedent that is not binding on a court but that is entitled to respect and careful consideration. For example, if the case is decided in the neighborhood jurisdiction, the court might evaluate the earlier court’s reasoning without being bound to decide the same way.