Notes to students1 Please identify the issues in your answer. There are often severalissues in one question.2 State the legal principle applicable to each issue, including relevantcase law and legislation, then analyse the facts and apply theprinciple to them.3 Your answer may cover matters not discussed in the study units.

Question 1 (60 marks)a Mary is desperate to sell her beauty business, SnowBeauty. She hasheard that Lily, a nearby business rival, is interested in expanding herbeauty empire. Thinking that she may be able to interest Lily inbuying SnowBeauty, Mary asks a mutual friend, Holy, to inform Lilythat the business is 'a gold mine and is a great investment.' In fact,owing to the recent establishment of two additional beauticians onthe same street, Mary has been rapidly losing her client base. Heraccountant has recently written to her with information on herdeclining profits, but Mary has been too busy to read the accounts.Holy passes the information and Lily goes to visit SnowBeauty. Sheinspects the premises and notices that some structural renovation isneeded. Mary informs Lily that she will be contacting builders tomake the necessary repairs before the sale. Lily asks Mary about heryearly profits. Quickly making up a figure, Mary tells her that lastyear's turnover was HK$10 million, since she is the only beauticianaround. Lily is impressed, but also surprised, since she knows thatMary's business has nearby competitors. She nevertheless decides tobuy the business.On occupying the premises Lily notices that the renovations have notbeen completed and discovers that Mary did not have time to contactthe builders before the sale. The renovations will cost herHK$200,000. Six months on, the profits are non-existent. In fact, Lilyis losing over HK$500,000 per month.2 LAW B262 Business Law IRequired:Advise Lily on whether she can rescind the contract and explain therelevant principles of law and cases involved. (30 marks)

b Zen, a chef, enters Cook IT, a cooking apparatus store, in order tobuy some cookware for an important event that he is hosting in hisrestaurant. He seeks advice from Yan, a shop assistant, about thequality of the pans in which he is interested. Yan tells him that 'thesepans are the best in the range. They can sustain the hottesttemperatures on earth!' Zen decides to purchase a set of these pansand a range of very sharp knives.As Zen is paying for the items at the cashier, he asks for them to bedelivered to his restaurant. He is handed a sheet of paper withconfirmation of the delivery details. At the bottom of the deliverynote are the following terms:• Cook IT does not accept any responsibility whatsoever forstatements made by employees prior to entering into the contract.• Cook IT does not accept responsibility for any damage or injurycaused by defects in the quality of our products.• No terms will be implied as to the quality of the goods sold.On the night of the event, Zen finds that the pans do not sustain hightemperatures at all and much of the food is burned, making itcompletely inedible. In addition, the handle on one of the knives isloose and causes Zen's hand to slip when cutting some onions. Hebadly injures his finger and has to be rushed to the hospital. As aresult of these events, the evening is a disaster and Zen's businessreputation is so badly affected that he fears his restaurant will have toclose.Required:Zen wants to sue Cook IT. Advise Zen on his rights and remediesbased on the Contract Law, the Control of Exemption ClausesOrdinance and the Sale of Goods Ordinance. You need not considerthe Unconscionable Contracts Ordinance. (30 marks)

Question 2 (40 marks)Cindy, a popular ballet dancer, was walking to a dancing studio. As shewas in a hurry, she crossed a busy road when the traffic light forpedestrians was red. Cindy was knocked down by Jimmy, who wasdriving a taxi at a high speed. She suffered a minor injury on her rightarm.10 minutes after the accident, an ambulance came and took Cindy to thenearby Healthy Hospital. Unfortunately, due to the carelessness of theambulance driver Paul, it collided with another car. As a result of the Assignment File 3collision, Cindy suffered serious injuries and lost both legs. She couldnever dance again.Jimmy is the owner of the taxi and Paul is an employee of HealthyHospital. Both Jimmy and Paul were later convicted of careless drivingand fined by the Shatin Magistrates' Courts. Cindy now wants to takelegal actions to seek damages for the injuries she suffered.Required:Advise Cindy on whether an action for negligence is likely to succeedand against whom. You also need to explain the relevant principles oflaw and cases involved in the action, as well as whether there are anydefences against the claim from Cindy