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

Vantor Ltd operates in a country whose legal system follows the common law tradition. A dispute arises on a point of contract law that was decided last year by the country's highest appellate court in a case with similar facts. A lower court is now hearing Vantor's case. What must the lower court normally do?

The lower court must normally follow the highest appellate court's decision. Under stare decisis in common law systems, the ratio decidendi of a higher court in the same hierarchy is binding on lower courts, so it is not merely persuasive and cannot be ignored.

  1. AFollow the highest court's decision, because it is binding precedent on lower courtsCorrect
  2. BTreat the decision as merely persuasive and decide the point afresh
  3. CIgnore the decision because only legislation is binding in a common law system
  4. DRefer the point to the legislature for a ruling before deciding

Explanation

In common law systems the doctrine of stare decisis requires lower courts to follow the ratio decidendi of decisions of higher courts in the same hierarchy. The decision is therefore binding, not just persuasive. Option B is wrong because persuasive status applies to courts outside the hierarchy or to obiter statements.

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