Final answer:
The legal system where cases are judged based on legal precedents and evolves through judicial decisions is called common law. Under this system, courts interpret the law and make rulings that set precedents, guided by the principle of stare decisis.
Step-by-step explanation:
The legal system in which each case is considered in terms of how it relates to legal decisions that have already been made and evolves through judicial decisions over time is known as common law. This system, also referred to as case law or precedent, is one where law develops by judges through decisions of courts, respecting and applying the rulings made by previous courts to current cases. The U.S. court system operates on the principle of stare decisis, which emphasizes the importance of consistency of precedent in ensuring greater certainty and stability in law.
Under the common law system, courts have a more active role in the law-making process through their rulings and interpretations. This is distinct from the civil law system where judges are mainly tasked with applying the law, rather than interpreting it. The concept of judicial review also plays a significant role in common law, where courts do not simply discard the actions of other government branches but interpret the law to uphold an even-handed administration of justice.