Breakback & Co Pty Ltd (Breakback) employs Soon Chu as the manager of their Victorian sales division. Soon Chu is to quote to potential customers on the cost of installing the various machines that the company provides, draw up any new contracts on behalf of the company and, further, ensure that a deposit is paid by potential customers. These monies are then deposited in the company's bank account. Soon Chu is on a fixed salary, but his contract of employment allows for the payment of a bonus if he exceeds his annual target of signing new customers.

The company is very impressed with Soon Chu in the first month of his employment; he has signed at least 20 new customers and work has begun on at least half of the new projects signed.

After another month has elapsed, the company receives many complaints from customers who claim that the installation of their machines is substantially different to what they had contracted for. Some customers were given wrong advice on the suitable placement of their machines, which means some newly installed machines will require considerable adjustment which will be a costly exercise for the company.

It appears also that some of the deposits have not been paid into the company's bank. Soon Chu appears to have kept part of the money collected.

The company also discovers that Soon Chu is in the process of setting up his own business, which will compete with Breakback.

Required:

In considering the facts above, make some legal observations on the following:

1. Is Breakback liable for Soon Chu's actions? On what basis in law would this be the case?

1. Can the company claim they are not liable for Soon Chu's actions because he has not followed instructions? Explain.

1. Is Soon Chu liable to his employer for any of his actions? On what basis in law would he be liable?

1. Has Soon Chu breached any law if he is planning to set up his business? Explain.