Simply put, it implies that, depending on the court's organizational hierarchy, the judgments reached by judges in earlier, analogous cases are binding on later cases.
As a result, where a case contains comparable substantial circumstances to a case that has been determined by a higher court, a lower court is required by precedent to adopt that judgment. A court is required to follow the ratio of any judgment made by a court further up in the hierarchy, whether or not the decision is correct
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