Alex Levy is a 4th year computer science student at the University of Waterloo. Alex is quite brilliant and in her second year of school developed an App which she sold to Apple for $3 million. Alex regularly used Uber for transportation in Kitchener. As she thought more about it, she thought that there was potential for a Canadian business that provided a similar business. She thought she could develop an App and a business that would result in more money going to the drivers and some to her. Alex developed an App called TMS (which she also adopted as a business name), that allowed customers that needed a ride to click on their app and order a ride. Riders were charged a $2.50 fee plus $5 per KM with a minimum fee of $12.50. If you wanted to be a driver for TMS, you completed an application form that showed that you had a "nice car" and a "valid Ontario drivers' licence" and paid Alex a $250 application fee. If accepted a simple 2 | Page agreement was signed as between the TMS driver/provider and TMS. The agreement between the TMS driver/provider and TMS incorporated the $2.50 fee and kilometer charged referred to earlier. Yanko Flores and Daniel Hen were close friends who went to UTM together. Yanko comes from a wealthy family and was very entrepreneurial. Daniel has very few assets but is a hard worker and aspires to "be really rich one day." Daniel had read about TMS and thought it would be a great thing to be involved with. Yanko agreed to borrow $40,000 on a 5-year loan to purchase a used Tesla and Daniel agreed to act as the driver (and perhaps to hire another driver for additional hours). Yanko thought that was a good work arrangement as he saw himself more of an "investor" and saw Daniel as the manager/"boots on the ground." Yanko and Daniel agreed that initially Yanko would get 100% of the profits until the Tesla loan and interest is covered and after that they would split profits 50/50. Things worked really well. When Daniel was not driving, he was able to hire responsible individuals to drive the Tesla and paid them $15 per hour. The TMS app worked great, and so Daniel was able to keep the Tesla utilized providing rides to paying customers generally 18 or so hours a day. Just a side note, "because the Tesla was being used like a taxi, many of the alarms and alerts were disconnected. For example, the alarms that signalled a seat belt not being used or that the car trunk was open (an issue when lots of luggage) were disconnected to not distract the driver. This is very common with commercial vehicles. January 17, 2021, was a cold and snowy night in Toronto. Roads were wet and possibly icy. Daniel was driving the Tesla, when on his phone at around 1:30 am, he received a ride request through TMS to pick up multiple passengers at the Charlie Bar in Toronto. Cory Ellison ("Cory"), age 30, and three of his male friends had been at the Charlie Bar celebrating a birthday with some other friends. The four had arrived at the Charlie Bar at around 8 pm and all had consumed a considerable amount of alcohol. It is fair to say that they were all intoxicated. Cory was very intoxicated. One of the four used the TMS app to order a car. At approximately 1:45 pm the Tesla driven by Daniel pulled up in front of the Charlie Bar. Daniel accepted the fare. Three of the men sat in the back seat of the taxicab. Cory sat in the passenger seat up front. On entering the taxicab, Daniel noted that all passengers fastened their seat belts. Shortly after leaving the Charlie Bar en route to Cory's house, one of the rear seat passengers said they were going to be sick. Daniel stopped the car and the passenger got out briefly to throw up. After the passenger got back into the car, the ride continued. About ten minutes later, the Tesla was struck by a vehicle that did not stop at a stop sign. The Tesla was "t-boned" and in turn, hit several hydro poles and slid down an embankment. This was a serious accident. Cory was very seriously hurt. The nature of his injuries is such that he will be restricted in activities and will require attendant care for the remainder of his life. The three passengers in the rear seat were hurt but not very seriously. It was subsequently determined that: 1. Daniel did not cause or contribute to the motor vehicle accident (MVA); 2. The driver that caused the accident is 14 years old and was driving a stolen vehicle. He has no assets or insurance coverage. 3. Cory was not wearing his seat belt at the time of the MVA. Prior to the time of the MVA, Cory must have unbuckled his seat belt (perhaps when the car stopped briefly when the friend had to vomit); 4. A medical expert who had detailed knowledge of the MVA has determined that Cory's injuries would have been substantially less had he been wearing a seatbelt. 5. No claim is being made by the rear seat passengers against Daniel. 6. Cory's family and his now litigation guardian, are of the view that this would never have happened had Daniel acted properly. Daniel is very concerned as to possible liability. When Daniel heard that Cory was going to sue him and TMS, he called Yanko and told him "We need a lawyer". Yanko responded by saying, "I think YOU need a lawyer; I am just an investor. A silent one at that." Daniel disagreed and said" "we're in this together". Daniel decided to come to you, Bea Calm, a legal advisor employed by the Mississauga law firm, Stella & Bak, LLP. Daniel asks you to make a memo for him (using whatever format you choose) that addresses all of the legal issues in this fact situation and advise him on any potential legal liability that he and Yanko and TMS each might have and how they can best defend themselves against Cory's lawsuit. Daniel asks 3 | Page that you specifically clarify the legal entities involved and the implications of this in the event that Cory was successful.

REQUIRED: Assume the role of Bea Calm.