Reference no: EM131290524

Companies and Partnership Law question

Graham, Kelly and Mick have been running "Animal Crackers," a children's birthday party business specialising in Australian balloon animals for birthday parties for children under 10.

They don't have an office, but have a website and work out of Mick's Lounge room. Mick is the creative force behind "Animal Crackers," he came up with the idea for the business and designs all of the balloon animals. Kelly is the balloon engineer; she attends all the appointments and constructs the balloon animals. While Graham is the general manager and in charge of stock control; Kelly and Graham are both paid a salary from "Animal Crackers", but are also mentioned on the letterhead as partners. While Mick is not paid a salary, he retains the remaining profits once all debts and salaries are paid.

One month after her appointment Kelly is constructing a giant echidna at a customer's birthday party. As she is constructing it, a small twisting balloon, that was being used as a spine, breaks and injures a near standing child. It turns out that the child has been permanently blinded by the exploding echidna display, and his parents are now suing "Animal Crackers."

Advise Graham, Kelly, and Mick