Collateral estoppel, or issue preclusion, prevents parties from relitigating identical issues that were already resolved in a prior proceeding with a final judgment. It ensures the efficient use of judicial resources and upholds stability in the legal system by respecting previous decisions.
For example: If a tenant’s claim against a landlord for property damages is decided in small claims court, collateral estoppel would bar the tenant from suing again on the same damage claim in another court.