Sasha and Emi are two friends who met when they worked together as chefs at a famous restaurant in New York, but both have now moved to Adelaide. They have decided to set up their own restaurant which will ‘fuse’ the best of the cuisines of Japan (where Emi was born) and Australia (where Sasha comes from. Each of them has come from New York with $100 000, which they want to invest in the new business. It is one year after the company was incorporated, and business is going well. An important Japanese trade delegation visits Adelaide, and the restaurant hosts a banquet for them. Unfortunately the banquet, designed to showcase local produce, includes a mushroom which may have been poisonous, and was picked by Sasha in the local forest. The husband of one of the visiting delegation becomes seriously ill. He is in hospital for several weeks, which causes great expense and delay, including him missing key acting auditions back in Japan, and causes anxiety to his wife, not to mention embarrassment to the local government. Emi is for furious with Sasha her careless mushroom-collecting. When the visitor starts proceedings against the restaurant for a six-figure sum, Emi says that as it is Sasha’s fault, Sasha or her family trust should be liable to pay the damages. If the proceedings are successful, where does the liability to pay the damages lie?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Sasha and Emi are two friends who met when they worked together as chefs at a famous restaurant in New York, but both have now moved to Adelaide. They have decided to set up their own restaurant which will ‘fuse’ the best of the cuisines of Japan (where Emi was born) and Australia (where Sasha comes from. Each of them has come from New York with $100 000, which they want to invest in the new business.

It is one year after the company was incorporated, and business is going well. An important Japanese trade delegation visits Adelaide, and the restaurant hosts a banquet for them. Unfortunately the banquet, designed to showcase local produce, includes a mushroom which may have been poisonous, and was picked by Sasha in the local forest. The husband of one of the visiting delegation becomes seriously ill. He is in hospital for several weeks, which causes great expense and delay, including him missing key acting auditions back in Japan, and causes anxiety to his wife, not to mention embarrassment to the local government.

Emi is for furious with Sasha her careless mushroom-collecting. When the visitor starts proceedings against the restaurant for a six-figure sum, Emi says that as it is Sasha’s fault, Sasha or her family trust should be liable to pay the damages.

If the proceedings are successful, where does the liability to pay the damages lie?

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