Cosima and Scott decide that they want to start a business together, organising 'events' at which they will give motivational speeches.The focus of the events would be to encourage people to live self-sufficiently and return to farming and agriculture.

Scott and Cosima agree that Cosima will deliver the speeches at events initially but after the business is established, they intend to hire staff, who will be trained to deliver the speeches.

They agree that Scott will handle the promotion of the business and bookings for events.Cosima is to handle the training and determining the content of speeches. They further agree to keep each other informed about major business decisions and meet regularly to go through the books.

Scott finances the majority of the start up costs of the business, buying training equipment and leasing the lower floor of a friend's property to run the business from. They set up accounts with suppliers in the name 'Wholesome'.For the first few months, they don't make any profit and Scott has to borrow $30,000 from his parents to support the business.

About three months later and after a great deal of hard work, Cosima and Scott have more bookings than Cosima can manage.They meet weekly togo over the books, talk about events and discuss expansion of the business.They primarily make money from charging clients a booking fee based on the size of the event and additional costs, such as the venue hire.

Cosima and Scott hire their first staff member, Alison.Alison is very experienced and they believe that she is the best candidate.Alison's first few events go very well and the feedback that Cosima gets is very positive.

Alison starts offering her own homemade soap at events for a small fee.She thinks this makes the event more friendly and promotes the ideals which she is speaking on.She keeps the money from the soapsales but only makes a little profit.

Cosima notices that Alison has made her own business cards and added the title 'Pacific Region Event Facilitator' under her name and in her emails.Cosima is not impressed and tells Scott, who finds it amusing and tells Cosima not to worry about it because it makes the business look more impressive.

Scott pays his parents back from the business, but they refuse to accept $10,000 of the repayment, telling Scott to keep it for the business. Scott takes the $10,000 to the local RSL Club and loses it playing poker machines.

Alison is approached at an event by Ramone, who asks Alison for a 'special rate' for offering six events to his employees.Alison is excited to be able to make money for the business and immediately agrees.After thinking about it further, she sends Ramone an email, offering a fifteen percent discount on the booking fee and including all other costs.Ramone sends back a response straight away accepting.

Alison then forwards the emails to Scott.

Cosima attends an event unexpectedly and sees the soap forsale.

Scott and Cosima are very unhappy with the offer and the soapsales and they tell Alison that she did not have any authority to make these decisions.

Questions:

1. What is the basis of the legal relationship between Cosima and Scott.
2. Is Scott liable for the $10,000 and, if so, on what basis?
3. What is the basis of the legal relationship between Cosima, Scott and Alison.
4. Are Scott and Cosima bound by Alison's actions with Ramone and, if so, in what capacity?
5. Is Alison liable and if so, what for and to whom?