Ratio decidendi is a Latin phrase that means "the reason" or "the rationale for the decision". It refers to the essential elements of a judgment that create binding precedent and must be followed by inferior courts. The ratio decidendi is the point in a case that determines the judgment or the principle that the case establishes. It is a legal rule derived from, and consistent with, those parts of legal reasoning within a judgment on which the outcome of the case depends.

The ratio decidendi is different from obiter dicta, which are unnecessary observations that have no force as precedent. The process of determining the ratio decidendi involves a correct analysis of what the court actually decided, based on the legal points about which the parties in the case actually fought.

The ratio decidendi is one of the most powerful tools available to a lawyer. With a proper understanding of the ratio of a precedent, the advocate can, in effect, force a lower court to come to a decision which that court may otherwise be unwilling to make, considering the facts of the case.

In summary, ratio decidendi is the reason for a courts decision and is part of the judgment delivered at the end of a case. It creates binding precedent and must be followed by inferior courts.