The Marbury vs. Madison decision of 1803 set the precedent that the court could nullify an act of Congress if it was found to be inconsistent with the Constitution. This ruling formed the basis of judicial review and established the separation of the executive and judicial branches.
One of the last acts of the Adams administration was to appoint William Marbury as a justice of the peace. When Thomas Jefferson took office, his Secretary of State James Madison refused to recognize the commission. This led to Marbury petitioning the Supreme Court. The Supreme Court denied the petition on the grounds that it would extend the reach of the Supreme Court. This decision was based on the Judiciary Act of 1789.
While the decision appeared to limit the power of the Supreme Court, its long-term effect has been to increase the court's power by defining it as the ultimate interpreter of the law. This mandate has been in place ever since Marbury vs. Madison.
The decision by the Supreme Court was criticized by Thomas Jefferson; he felt the court was placing itself ahead of all other offices as the most powerful. Other legal scholars have also come to question the decision.