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A judge-made law is a law rooted in a judiciary decision, not an act of legislation made by lawmakers or a regulation created by a government agency with the legal authority to do so. The collective body of judge-made laws in a nation is also known as case law. Many nations allow judges to set legal precedents when making high court decisions, adding to the body of law in a nation and providing new interpretation of existing laws.
Lower courts do not have the authority to make judge-made law. Only judges operating in appellate and other high courts are able to set legal precedents by either changing the way the courts interpret a law, or offering a new interpretation that expands an existing law. Judges cannot invent laws out of whole cloth; they must be able to provide clear legal rationales for their decisions, with supporting information in the form of decisions in single cases.
After a judge-made law is created, other courts are bound to uphold the law, or to support challenges to it. As other courts abide by the law, they reinforce it and create a body of case law to support the original judge's interpretation of a legal situation. If a challenge is filed in another court, the other judge can choose to overturn the decision, negating the judge-made law, or uphold it, leaving the law in place.
Case law provides an important mechanism for allowing the legal system to evolve along with society, as judges confront cases legislators might not have foreseen, or face challenges to acts of legislation that appear to have dubious merits. Judge-made law may expand the authority of a given law, as seen when a judge decides that an existing law covers a situation, if indirectly. It can also challenge, and sometimes reverse, the interpretation of existing legislation.
When a judge prepares an opinion she knows will set a precedent, she musters up as much supporting information as possible to prop up the decision and make it clear that though the interpretation is novel, the logic behind it is sound. This can include excerpts from opinions written by other judges, discussions of the intent behind given legislation, and larger overviews of social norms and beliefs. In the United States, for example, a judge may use the Bill of Rights to support a case, arguing that he would violate the rights in this document by interpreting a case in any other way.