From Academic Kids
Precedent is the principle in law of using the past in order to assist in current interpretation and decision-making. Precedent can be of two types. Binding or mandatory precedent is a precedent under the doctrine of stare decisis that a court must consider when deciding a case. Advisory precedent are cases which a court may use but is not required to use to decide its cases. In general, binding precedent involves decisions made by a higher court in a common law jurisdiction.
Precedent in law can also be divided into custom and case law.
Long-held custom which has traditionally been recognized by courts and judges is the first kind of precedent. Custom can be so deeply entrenched in the society at large that it gains the force of law. There need never have been a specific case decided on the same or similar issues in order for a court to take notice of customary or traditional precedent in its deliberations.
The other type of precedent is case law. This type of precedent is granted more or less weight in the deliberations of a court according to a number of factors. Most important is whether the precedent is "on point," that is, does it deal with a circumstance identical or very similar to the circumstance in the instant case? Second, when and where was the precedent decided? A recent decision in the same jurisdiction as the instant case will be given great weight. Next in descending order would be recent precedent in jurisdictions whose law is the same as local law. Least weight would be given to precedent which stems from dissimilar circumstances, older cases which have since been contradicted, or cases in jurisdictions which have dissimilar law.
Precedents viewed against passing time can serve to establish trends, thus indicating the next logical step in evolving interpetations of the law. For instance, if women have been enjoying greater and greater equality under the law, then the next legal decision on that subject may serve to bring still greater equality.
When a precedent becomes of significant importance to an issue, or represents new or changed law in a particular issue, that precedent is often referred to as a Landmark case or landmark decision.
The argument on setting a precedent is a common fallacy in discussion. It consists in saying that to act correctly in circumstances X would be inadvisable, in case others consider that this would set a precedent for acting in circumstances Y, where (it is argued) X and Y are superficially similar but (on close examination) are radically different. See Microcosmographia Academica for the original statement.