Question 1

Sally is an experienced chef, who has been operating a boutique restaurant for a number of years. Sally employs a new cook on the basis that the new employee must sign a contract that he will not leave employment with Sally before a period of five years. In the event of leaving employment, the employee is not permitted to compete or work in an area within 10 kilometres of Sally's business.

Sally shares some of the 'secrets of the kitchen' with the employee, which includes information on the ingredients of her famous dishes, plus the techniques of producing such fine food.

After some two years with Sally, the employee declares that he wishes to leave employment with Sally. Sally, upset at losing such a skilled employee, agrees that the employee can leave. However, within two days Sally discovers the employee is in fact working with a competitor restaurant who is actually advertising some of the same dishes that Sally's restaurant is so famous for.

REQUIRED

What rights does Sally have to prevent the worker:

• from leaving her employment (if she had chosen to do that)?
• from preventing the worker from working for someone else?

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Question 2

James owns and runs a hairdressing salon where he washes hair, cuts hair, dyes hair, and generally does everything that a hairdresser does. James engages the services of Acme Plumbing to replace the water pipes that run into the shop, plus to change the fittings he uses to service his customers. The job is to be done on a Saturday afternoon and Sunday when the shop is closed to customers.

Acme does not start the work on Saturday, but arrives late on Sunday believing that it is a small job.

Things go wrong immediately for the plumbers. One of the workers punctures a main pipe and the shop is flooded with water, and water seeps through either side of the shop into the premises of the neighbouring businesses. The damage is considerable and various work is now needed to repair James' shop, and the neighbours' as well.

James has some $80,000 damages to his shop and his lost business for two days is $3,000, although he is going to 'borrow' a friend's shop while the repairs take place. James is concerned also that he will lose customers and this will affect his business.

James is obviously upset, and wants compensation from the plumber, who he knows has insurance.

REQUIRED

What rights does James have to seek compensation for his losses and possible loss of reputation and customers?

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Question 3

Gayle and Julie run a service station in a country town. The service station sells petrol and a number of other goods, which are displayed near the cash register and outside the office. Gayle and Julie are partners in the business, though they have an old written agreement that states that neither will order goods or services over the value of $1,000 unless the contract contains signatures from both partners.

Gayle has been approached by a supplier of magazines who offers the business the delivery of 100 copies of a particular publication each month. Gayle convinced that the magazine is popular and will make some money, signs a contract with a promise to pay $3,000 in instalments for the delivery of the magazines.

The magazines arrive and Julie is very upset, firstly because the magazine is quite unsuitable for display in the business and may result in a loss of customers if they see this publication. But she is also upset that Gayle has made an agreement without consulting her. There is an argument between the partners and Gayle takes sick leave and stays at home to recover from the stress of the argument. In the meantime, Julie communicates with the supplier of the magazines and declares that the agreement to supply the publication is invalid due to a breach of the partnership agreement and that the magazines will be returned and no payments will be forthcoming from the business.

REQUIRED

Explain, with reference to partnership law:

• whether Julie can cancel the contract with supplier of the magazines
• whether Julie can be liable for the actions of Gayle.

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Question 4

Lucy, Seamus and Koo are students who are keen to earn an income in their spare time to finance their studies. Lucy has a truck, Seamus owns a lawnmower and Koo has a computer. They print flyers advertising LuSeKo Mowing Service, their registered business name, which they drop in to neighbourhood letterboxes.

Within a short time, LuSeKo has a list of regular clients. Seamus cuts the grass, Lucy removes the clippings in her truck and Koo keeps the accounts.

Seamus decides that they need an industrial ride-on mower and orders one from FastCut Mowers in the name of LuSeKo. Lucy and Koo were not consulted about this purchase.

Meanwhile, Lucy develops a separate business relationship with many of LuSeKo's clients by removing rubbish from their properties on weekends while Seamus and Koo are busy studying. These clients pay Lucy in cash, which she deposits into her personal bank account. Lucy does not disclose these jobs to Seamus and Koo.

When FastCut's bill arrives, Koo is particularly upset when she realises there is insufficient money in the LuSeKo bank account to pay for the ride-on mower.

Then, while operating the ride-on mower, Seamus hits a stump and is flung under the rotating blades. He later dies as a result of his injuries.

REQUIRED

1. Are Lucy, Seamus and Koo carrying on a partnership?
2. Assuming that Lucy, Seamus and Koo are in partnership, would Lucy and Koo be liable to contribute to the purchase of the ride-on mower?
3. Is Lucy in breach of any partnership duties as a result of carrying out her weekend work?
4. If FastCut wishes to commence a legal action against LuSeKo to recover the purchase price of the ride-on mower, how could FastCut discover who the individuals are behind that business name?
5. What effect will Seamus' death have on the partnership?
6. How would Lucy and Koo determine what is partnership property? How would the partnership's property be used to meet the LuSeKo's losses?