Which of the following indicates a clear understanding of the legal term 'precedent'?

The term 'precedent' refers specifically to an established legal principle or rule that is created by a court decision in a previous case. When a court encounters a case with similar facts or legal questions, it will look to precedents to guide its decision-making process, ensuring consistency in the law. This concept is a fundamental element of common law systems, where court rulings can create binding authority for future cases.

In contrast, a historical reference to past laws does not capture the active role precedents play in shaping current legal interpretations. Similarly, while a future guideline for legal decisions might imply the idea of ruling on cases, it does not accurately depict the retrospective application that precedents suggest. Lastly, a suggestion for law amendment does not relate to legal principles derived from past cases, as it pertains more to the legislative process rather than judicial rulings. Therefore, identifying precedent as an established legal principle from a prior case most accurately reflects its meaning in the context of law.