The University of Adelaide - COMMLAW 2500

COMMLAW 2500 Commercial Law II

Tutorial 1 Week 2

1)Mabel and Jim are interested in setting up a beach kiosk offering drinks, chocolates and other delights to beachgoers at Port Noarlunga. They locate a property and buy it. They paint and decorate the building to suit their purposes. Being best friends they decide not to incorporate a company because ‘it costs you lots of money from start to finish’. Business proceeds steadily and it is not long until their kiosk becomes a beach favourite. Hearing of the popularity of this new kiosk, the local Council decides to investigate whether or not Mabel and Jim have a permit to run the kiosk. They do not. The Council inspector visits the kiosk and issues Mabel and Jim with a summons for breach of the Beach Front Food Act 1998 (SA). {not a real Act but made up for the purposes of the exercise}

Soon after, Mabel is visiting her lawyer to discuss the summons and leaves a load of sausages in the boot of her car for 2 hours. When she arrives at work she makes 40 hot dogs. The next day, 25 cases of food poisoning are reported at the local hospital. All of the patients had eaten hot dogs from Mabel and Jim’s kiosk. Jim tells Mabel that this was all her fault and that he is not going to pay the $750 hospital fee for each patient. Mabel responds by saying that it was his idea to set up the kiosk and therefore he should have to pay the fine for not having a permit.

Finally, Mabel has discovered that Jim has just been declared bankrupt as a result of credit card debts that he has accumulated over the last year. The Trustee in Bankruptcy, who is in control of Jim’s estate, claims money out of the business accounts that relates to profits that Jim made from seminars he conducted on ‘How to Run a Successful Business – A Kiosk Case Study’ on the grounds that they are not partnership income and therefore are not available to Mabel.

Discuss the nature of the relationship Mabel and Jim formed, with particular attention to the legal aspects of their activities.

Hints:

1. What is the issue(s) of law here? (I)

2. Which rules are applicable? (R)

3. How should we apply the rules? (A)