What does "precedent" refer to in legal terms?

In legal terms, "precedent" refers to a judicial decision that serves as an example or authority for future similar cases. When a court makes a ruling on a particular matter, that decision can establish a legal standard or principle that other courts are expected to follow in future cases involving similar facts or issues. This concept is foundational to common law systems, where past judicial decisions inform the interpretation of laws and guide judicial behavior.

Precedent ensures consistency and predictability in the law, allowing individuals and entities to have a clearer understanding of how laws may be applied in future situations. When a court applies precedent, it typically relies on the principle of stare decisis, which means "to stand by things decided," emphasizing the importance of adhering to established legal rulings to maintain stability in the legal system.