"Accurate Accounting" is the name of the partnership business set up by two accountants, Jodee and Rodney. But two years after being set up, the firm collapsed. Jodee did not come into work one day and was never seen again. The customers stopped coming in soon after. Rodney discovered soon after this that before leaving, Jodee borrowed $100,000 from a credit and finance company, Ex-Am Ltd, at very high interest rates. He told Ex-Am that he was authorised by Accurate Accounting to borrow the money for the purpose of expanding the business. This was not true. The money disappeared along with Jodee. Ex-Am wants Rodney to repay the $100,000. Rodney claims that he is not responsible as the money was used for Jodee's own purposes. Alternatively, Rodney claims that, if he is liable, his liability is limited to $50,000. This is because they had agreed that they would each be liable for half of the costs of the business. He does note, however, that they did not tell anyone about this agreement.

To add to his problems, Rodney has discovered that Jodee is still trading in the name of the business - somewhere - and Rodney is worried Jodee will incur further debts in the name of the firm.

a)What is Rodney's liability to Ex-Am? Examine under common law and statute?

b)What must Rodney do to prevent himself being liable for any liabilities incurred by Jodee?

(under australian law)