Scarlett and Sofia have started a business named "nettoyer les pattes" which is a small cat grooming salon operating from Scarlett's garage. They have appointments and see various cats from the neighbourhood, and they clip, clean, and groom then. The only things they have done, with regards to the business management, is register an ABN.

The business grows and they purchase a van to drive to cat owners' homes and groom their cats. They employ Olivia to operate the van and travel and groom the owners' cats.

A client named Andrew has a beautiful black cat named Terry. Andrew contacts nettoyer les pattes and they arrange for Olivia to go to Andrew's house and groom Terry.

Over the next month the following events unfold:

a)  On the day of the appointment Olivia is driving the van and on entering the driveway, the breaks of the van fail and it damages Andrew's beloved motorcycle causing $10,000 damage.

b)  Without discussing it with Scarlett, Sofia orders a new clippers and a new machine for perms, the 'Terminator 2000' from Yeti's Animal Products ('YAP'). However, Scarlett says she never would have agreed to this if she had been asked. YAP has demanded payment of the outstanding invoice of $5,000 from Sofia.

c) Without consulting Scarlett, Sofia has started a separate mobile grooming for dogs using the van on Saturdays. As yet, they have not started dog grooming as it would increase their costs, however, Scarlett and Sofia have previously discussed expanding this part of the business.

Discuss Scarlett's potential rights and liabilities. Support your response with relevant legal (case and or legislation) authorities.

Remember: Think about the business entity that exists and the obligations on each of the parties mentioned.

MUST use the IRAC method (Issue, Rules, Application, Conclusion) to answer.