The foundation of most rule-based reasoning is the principle of stare decisis, meaning to stand by things decided. Under this principle, when a court decides a case that falls within a rule established in a precedent decided by a superior court or the deciding court, the court must apply that rule, subject to the limits of the principle. The best justification of stare decisis is that complex societies need a great amount of law to facilitate private planning, shape private conduct, and facilitate the settlement of private disputes. Because American legislatures do not have the capacity or ability to enact more than a limited number of private law rules, private law falls largely to the courts. Without the principle of stare decisis, rules adopted in judicial opinions would not be binding and there would be no common law.

There are several limitations on the principle of stare decisis. The most important is that in most areas of the common law if a rule established by precedent is not even substantially congruent with social morality, social policy, and experience, it may be overruled.