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ACCA Applied Skills · Corporate and Business Law (Global) · Business, political and legal systems

In a negligence claim against Harlow Co, the judge states in her judgment that, had the claimant been a consumer rather than a business, the outcome would have been different. The claimant was in fact a business, and this comment was not necessary to the decision. How is this comment best described in terms of precedent?

The comment is obiter dictum. It was a remark about hypothetical facts not necessary to decide the case, so it has only persuasive value for later courts. Only the ratio decidendi, the reasoning essential to the decision, forms binding precedent.

  1. AObiter dictum, which is persuasive but not binding on later courtsCorrect
  2. BRatio decidendi, which is binding on lower courts
  3. CPer incuriam, which makes the whole judgment invalid
  4. DStatutory interpretation, which binds all courts

Explanation

A statement of law that was not necessary to reach the decision, such as a hypothetical comment on different facts, is obiter dictum. It may be persuasive in later cases but does not bind. Option B is wrong because ratio is the legal reasoning essential to the decision.

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