Within the English common law system, judges have more authority to interpret law but are bound by precedent.

A judgment contains the facts of a case, the legal position or reason for the decision (ratio) and the decision itself. The ratio sets a binding precedent for the lower courts. There is flexibility built into the system by the ability to overrule (usually by a higher court) and to distinguish one case from another.

Note that:

  • A ratio can be overruled. For instance, a ratio set out in one case can be overruled if it is held to be incorrect in a later case in the same or a higher court.
  • A decision can be reversed on appeal. A party that is unsuccessful in a case against another can appeal to a higher court on the ground that the lower court incorrectly applied the law.
  • The appeal court may decide to hold the ratio given by the lower court to be incorrect and reverse the decision.