Common Law


DEFINITION of 'Common Law'

In the United States, a body of unwritten laws based on precedents established by the courts. Common law is used in deciding novel cases where the outcome cannot be determined based on existing statutes. The U.S. common-law system evolved from the precolonial system of English common law.


The decisions (precedents) of higher courts are binding on lower courts so that the U.S. legal system will have consistency and stability. However, lower courts can choose to modify precedent or distinguish from precedent if precedents are outdated or if the current case is substantially different from the precedent case. Lower courts can also choose to overturn precedent, but this is rare.

  1. Affirmative Action

    A policy in which an individual's color, race, sex, religion ...
  2. Emblements

    Annual crops cultivated by a tenant which are treated as the ...
  3. Collateral Source Rule

    A common law rule of evidence pertaining to punitive or other ...
  4. Secondary Liability

    A type of legal obligation where one party assumes legal responsibility ...
  5. Estate Planning

    The collection of preparation tasks that serve to manage an individual's ...
  6. Marital Property

    A U.S. state-level legal distinction of a married individual's ...
Related Articles
  1. Retirement

    Relationship Money Matters

    Whether married, single or somewhere in between, you'll face unique financial challenges.
  2. Retirement

    Divorcing? The Right Way to Split Retirement Plans

    Mishandling how you define and allocate retirement-plan assets in a divorce can cost you plenty in taxes and aggravation. Here's how to do it right.
  3. Retirement

    Marriage, Divorce And The Dotted Line

    Does signing a prenuptial agreement put your marriage on shaky ground, or is it just smart planning?
  4. Retirement

    State Laws Dictate Division Of Joint Property

    In breakup, divorce or death, community or common law will determine how property is divided.
  5. Personal Finance

    How To Pick The Right Lawyer

    Find out what factors to consider before hiring an attorney.
  6. Budgeting

    Get Through Divorce With Your Finances Intact

    Find out how to split your finances without coming up short.
  7. Economics

    Popular Places Where U.S. Citizens Need A Visa

    A U.S. passport will get you into many countries, but not everywhere. Here's how to visit five of the most popular destinations that require visas.
  8. Economics

    How To Pass The U.S. Citizenship Test

    The U.S. citizenship test includes a civics section some states may require high school grads to master. Here's what an immigrant must know to pass it.
  9. Personal Finance

    5 Developed Countries That Welcome Expats

    Investigate these expat havens if you seek a developed country with low barriers for getting a permanent resident visa – sometimes even citizenship.
  10. Personal Finance

    5 Countries Where It's Hardest To Become A Citizen

    The United States is one of five countries that put up very high barriers for foreigners to get citizenship. Here's how it compares to the other four.
  1. When am I considered "married" for tax purposes?

    You are generally considered married for tax purposes as long as you were married as of the last day of the year, regardless ... Read Full Answer >>

You May Also Like

Hot Definitions
  1. Capitalization Rate

    The rate of return on a real estate investment property based on the income that the property is expected to generate.
  2. Gross Profit

    A company's total revenue (equivalent to total sales) minus the cost of goods sold. Gross profit is the profit a company ...
  3. Revenue

    The amount of money that a company actually receives during a specific period, including discounts and deductions for returned ...
  4. Normal Profit

    An economic condition occurring when the difference between a firm’s total revenue and total cost is equal to zero.
  5. Operating Cost

    Expenses associated with the maintenance and administration of a business on a day-to-day basis.
  6. Cost Of Funds

    The interest rate paid by financial institutions for the funds that they deploy in their business. The cost of funds is one ...
Trading Center
You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!