How can a court set a precedent and why is it important?
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An appellate court sets a precedent for all the courts within that court’s jurisdiction. Some state court jurisdictions are quite small; the U.S. Supreme Court’s jurisdiction is nationwide.
Courts set precedent by making a ruling, although they can make rulings that are not supposed to be used as precedent. The Supreme Court often only takes cases that will set an important precedent, as for example when other courts can’t agree on how to apply a new law, or when newly-appointed justices want to reconsider the rulings made by their predecessors.
Once the court sets a precedent it is binding on the trial courts and lower level appellate courts in their jurisdiction. It is not binding on courts outside their jurisdiction but can still be cited for persuasive effect. The precedent is usually a written opinion that goes into detail covering not just the immediate case, but all future cases that are similar.
That said, if the immediate case doesn’t present the facts discussed, that’s not considered precedent but a hypothetical ruling that’s not binding. That’s often called “dictum.”
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