Identify all the legal issues in the case.

Case:

Ray, Jay and Kay (RJK) are a partnership that produce technical writing for its clients. The three partners are all technical writers, but Ray has semi-retired as of December 31, 2021, and has verbally agreed that he is only to get 20% of the profits in 2022. He intends to work 2 days weekly. Jay and Kay agree verbally that they will split the remaining profits 40/40.

Ray is approached by World Health Help Centre, (WHHC) which is incorporated under the Canada Not for Profit Act. Its mission is to refurbish used medical devices for sale at a reduced price to the developing world as well as to hospitals in Canada. They ask Ray to do some of the technical writing for the operational manuals that accompany their refurbished devices. He is a volunteer and does not get paid for this work.

Ray spends all of his spare time on the project for WHHC and advises WHHC that RJK will stand behind the accuracy of the writing. Unfortunately, Jay and Kay have no knowledge of this. Ray makes a serious mistake in the instruction manual produced for a refurbished ultrasound machine, the result being that technicians and doctors at a hospital in Vancouver miss a cancer diagnosis and the patient, Hector, dies because of the missed diagnosis. The hospital releases Hector's patient information to WHHC to warn them about possible litigation in the future.

Hector's family sues the hospital and WHHC and WHHC third parties Ray, Kay and Jay individually. The claim is for $ 1 million. WHHC has insurance but the deductible is $500,000.

WHHC's board meets to discuss the case. They have generated a surplus of $750,000 over the past year but decide they cannot distribute the entire surplus to the members because of the $500,000 lawsuit. They hold back $500,000 in case they lose the litigation and distribute the remining surplus of $250,000 as a dividend.