Problem 4 (25 marks) Brad, Rick and Katharine have established separate advertising businesses. Brad and Rick operate as sole proprietorships. Katharine has incorporated a company, Katco Inc. to run her business. Katharine was recently the successful bidder for the production of an advertising campaign for Big Beer Brewery ("BBB"). Since she did not have the resources to complete the campaign, she suggested to Brad and Rick that they complete the job together. Brad, Rick and Katharine agreed that although the contract, as signed, was with Katco Inc., they would all contribute equal amounts of capital, staff and time and divide the profits equally, subject to a commission fee of $100,000.00 which would be payable to Katco Inc. for arranging the contract. The campaign was successful with each of the parties earning $200,000.00. On January 1, BBB told Katco Inc. that they would not be renewing the contract. In response to her inquiries BBB revealed that it has signed an agreement with Bradco Ltd., a corporation recently formed by Brad, for advertising services for the next year at a price of $300,000.00. Rick and Katharine come to you for advice and want to commence legal action against Bradco Ltd. and Brad for all profits, and/or an injunction to prohibit Bradco Ltd. from proceeding with the contract. Brad claims that since Bradco Ltd. is a new corporation, any past dealings which Brad may have had do not apply to Bradco Ltd. and in any event that they were never partners and therefore all clients were "up for grabs. Required: Advise Rick and Katharine whether they have any basis to commence an action against Bradco Ltd. or Brad. Can Brad be personally liable since it as Bradco Ltd. that signed the new contract? Be certain to explain the applicable principles as part of your answer. Would the situation be any different if Katharine (rather than Brad) was personally hired by the brewery as an in-house employee in charge of advertising? Why or why not?