Graces birthday is coming soon and she would like to hold a birthday party in a hotel. She decided to hire a special ballroom together with swimming pool next to it in the hotel The Love Hotel (The Love) for her birthday party. The ballroom is special for its unique decoration featuring many Minions, who are Graces favourite. Marco, the manager of The Love, accepted Graces booking for a hiring fee of HK$50,000. Grace paid a deposit of HK$10,000.

The next day, Grace went to a Summer Sale at Daisys shop. Her attention was drawn to a display of a smartphone, Xphone 17. Above the display was a sign which read, slightly damaged goods. Daisy described the smartphone being made of Brium, which is a soft, silvery alkaline rare metal in the world. Grace would like to take some photos in her poolside party. When Grace asked Daisy whether the smartphone can take photos underwater, Daisy confirmed that the newly released Xphone 17 can take photo anywhere in the world. Having carefully looked through this display of smartphone, Grace decided to purchase it because it was such a bargain. The price was reduced from HK$20,000 to HK$10,000.

One week before the party was scheduled to be held, torrential rain flooded The Love and half of the ballroom booked by Grace was damaged. Marco arranged a builder to restore the damaged ballroom to meet the schedule of the booking. After checking, the builder felt the ballroom was unsafe to be used unless restoration was made. He offered to finish the restoration to meet the booking schedule for a payment amount of HK$100,000. Marco felt this price was expensive but the builder stated that it would cost far less, only $30,000, if six-week time was allowed for the restoration. Marco felt that it is not worth the cost to rush to meet the scheduled booking as it would not be profitable.

Marco then explained to Grace the situation and offered to refund the HK$10,000 deposit paid by Grace. Grace refused to accept and insisted that Marco must provide the ballroom for holding her birthday party on the scheduled date. If not, she would sue Marco and the Love for breach of contract.

As the party was likely to be cancelled, Grace decided to return the smartphone to Daisys shop and argued that the smartphone was in breach of the Sale of Goods Ordinance.

(a) Marco seeks your advice whether he is entitled to cancel Graces booking due to the accident. Explain your answer. (17 marks)

(b) If Grace would like to return the smartphone to Daisy, advise Grace if she has any rights and remedies under the Sale of Goods Ordinance. (16 marks)