1- Lites made special lights for Pools Inc. The lights were enclosed in plastic and Lites said they were completely waterproof. Pools Inc. bought many of these lights and installed them on the sides of swimming pools under water. Pools Inc. installed Lites lights in a large new community swimming pool for the town of Preston. The lifeguards at the pool noticed that the pool lights flickered, but didnt mention it to anyone. One busy Saturday, not long after the pool opened, the seals on the pool lights

cracked and water seeped into the lights. This then caused an entire electrical malfunction in the pool and it sent very strong electrical currents running through the water. Many people were swimming and they received major electrical shocks. People panicked and ran from the pool screaming. It was slippery on the pool deck and many people slipped and fell. Roger, a 45 year old doctor, hit his head and has permanent brain damage. Forty people suffered injuries from this event and contacted their lawyers. Pools contacted Lites over this but Lites reminded Pools that in the contract it clearly states, Lites is not liable for any losses that may result from the use of their products. The people injured in the pool say they will sue Preston, Pools, Lites as well as the directors of the two companies. Mike Green is a director and CEO of Lites and has contacted his lawyer to find out if he could be held personally liable for these injuries. All parties contacted lawyers. Discuss all legal remedies with this case (10 Marks)

2- Lites Inc. has other legal problems. The local municipal taxes are 24 months overdue and the federal government is owed $30,000 in CPP and EI contributions that have not been paid for the past year. Ion Electric is one of their biggest suppliers and it is owed $70,000. The TD Bank has a $600,000 loan that was backed with a general security agreement and they have not been paid for 3 months. There are 30 workers who make $800 per week who have not been paid by Lites for the past 5 weeks. Lites shareholders had not received a dividend in 2 years, so the Directors just paid them dividends totalling $50,000. Some of the creditors have threatened to force Lites into bankruptcy. Lites wants to stay in business but is not sure if this is possible. Discuss fully what options Lites has and what would happen to Lites Inc. if it is forced into bankruptcy. Outline the steps and the rights of the creditors in this process.

Discuss FULLY the legal issues and the rights and remedies (10 marks)