England and Wales utilise a common-law system, which differs from the civil systems used in most of the rest of Europe. Common law is not based on Acts of Parliament, but on previous decisions by the courts. One principle of common law requires that the courts apply a previous decision made by a court on the same level or higher. Other characteristics of a common-law system include a trial by jury in the criminal courts and for defamation and a system of supremacy of law, by which every citizen is bound.
The development of common law has occurred because of custom and usage, and many principles have developed over time in accordance with what was thought at the time; as opinions and practices change, so does the law. While we now have Acts of Parliament which must be followed by the judiciary, there are still principles made by common law which are enacted by Parliament. This has meant that statutory law has now become more important than case law, although it is case law that provided and developed many points of law enacted by Parliament. When the judiciary is deciding a case in which statute is relevant, they will also need to decide the case in light of common law. Much common law has not been enacted into statute and many of the principles of contract law, for example, are still entrenched in previously decided cases.
Common law develops when a court makes a decision on a case. If a case has been previously decided by a higher court, the lower court has no option but to decide in accordance with it and allow an appeal if necessary. The Court of Appeal and the House of Lords (rather, the new Supreme Court) are the courts which have made most of the decisions that bind lower courts and in order to change the law a new decision must be made by a higher court, or in case of the Supreme Court, itself. Development of common law has taken place over hundreds of years and has occurred differently in different common-law jurisdictions, meaning that although common-law jurisdictions have the same basis for law, the law has developed so as to result in us now having different laws.