Statute and Common Law
British law derives its basis from two separate areas: common law and statute law. These interact in frequently complex ways, and the distinction between the two forms the basis of the British legal system - and, indeed, the legal systems of many of those countries who derive their laws from Britain's colonial influence, including the United States.
The concept of common law, also frequently known as 'case law' is closely linked with that of precedent. Historically, British law was derived mainly from the decisions of individual judges. These decisions then affect the way in which subsequent cases are interpreted; one judge's ruling will set a precedent for subsequent, similar cases. Similarly, when a judge is considering the merits of an individual case, they will look to previous instances in similar circumstances in order that they have a standard against which to make their judgement.
Today, common law is relied upon when there is no clear-cut codified statement in codified law. When there is no such statement and no precedent to which the judge can look, common law judges are permitted to create the precedent by making their own judgement informed by their knowledge of other law. This ensures that all cases of a similar nature receive similar rulings; this is a guiding principle of the British legal system.
In the event of a dispute over the interpretation of common law, so-called 'appellant' courts have the power to investigate and, potentially, overrule the decisions of lower courts. The final appeals court in Britain is the House of Lords, which has the power to overrule the decision of any other court. Again, the ruling of an appeals court sets a precedent against which all lower courts, and courts of the same level as the appeals court, must base future judgements. This is a legally binding requirement. On the other hand, non-appellant courts must consider precedent set by other courts of the same level of authority, but their decisions are only considered and not necessarily binding.
The other half of the British legal system is known as statute law. Law of this type does not necessarily derive its existence from the decisions of courts. Rather, it is a codified declaration that has been formulated by the executive - that is, it has been developed by the House of Commons, agreed upon by the House of Lords, and signed into the statute books by the Queen. Statute law is also known as legislation.
The decisions of courts, regardless of their level of authority, are primarily guided by statute law. If statute law relevant to the individual case exists, or if it is contrary to accepted common law, this will take precedence. On the other hand, if no legislation exists against which the merits of a case can be judged, the court may base its judgement upon established common law, or the judge may create precedent if none exists already. The heavy reliance upon common law can be demonstrated by the fact that there is no guiding legislation concerning such basic legal instruments as a contract. Rather, the legal norms determining the way in which contracts are interpreted by the courts have been developed solely through common law and precedent.