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CMA Foundation · Fundamentals of Business Laws and Business Communication · Sources of Law

In a judgment, the portion containing the legal principle essential to the decision is called ratio decidendi. Which statement about it is correct?

Ratio decidendi is the binding part of a judgment: the legal principle on which the decision rests. It forms the precedent that later courts follow. Incidental remarks, called obiter dicta, are only persuasive and do not bind future courts.

  1. AIt is the binding part of the judgment that forms a precedentCorrect
  2. BIt is a passing remark that has no bearing on the decision and is always binding
  3. CIt is the order on costs only
  4. DIt is the dissenting opinion of the Bench

Explanation

Ratio decidendi is the legal reasoning necessary for reaching the decision, and it is the part that binds in future cases. Remarks made in passing are obiter dicta, which are persuasive but not binding. Costs orders and dissents are not the ratio.

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