Introduction to Business Law - Assignment 1BAdvise TLC Ltd. of any possible action it may have for misrepresentation against Answer Ltd._____________________________________________________________________Treitel in The Law of Contract (2003) defines a contract as: “ An agreement giving rise to obligations imposed or recognized by law What distinguishes contractual obligations from other legal obligations is that they are based on the agreement of the contracting parties.” This quote illustrates the basic criteria of a contract. A contract is a legally binding agreement between two or more parties, it can be written or oral. There is no mention of a written contract between TLC and Answer, so we have to assume that there is an oral contract. The classic approach to determining whether a contact has been made involves agreement, consideration and intention. For there to be an agreement between the parties there must be an offer that contains the terms of the contract. If the recipient accepts, they accept these terms. In this case Answer offers to supply and install a new computer system and TLC accepts this offer and has the system installed for the sum of £100,000. Consideration is the price for which a promise is offered. It is the keeping of a promise that makes its breaking unjust. Defined in Currie v Misa (1875) as: "Some right, interest, profit or benefit accrued to one party, or some allowance, damage, loss or liability given, suffered or assumed by another." There must also be an intention to create a contract. In commercial situations like this, the intention to create a contract is presupposed. In Edwards v Skyways Ltd (1964) - the defendant was promised that once he was dismissed and collected his pension contributions, the company would again make him an ex gratia payment (given in grace - accepting no liability). He withdrew his pension but did not receive the extra payment. The court held that the presumption of creating a legally binding contract prevailed and all that the term ex gratia means is that there is no prior legally binding contract. A declaration is a statement about the contract that induces the other party to enter into the contract. A misrepresentation does not constitute a breach of contract but may lead to legal action for misrepresentation under the Tort of Deceal or the Misrepresentation Act 1967.