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Alfred and Beatrice operated a bookshop together, sharing profits equally. They decided to expand. Their friend Coco offered them $50,000 to help finance the expansion. Accordingly, she agreed with Alfred and Beatrice that she would lend the money in return for $5,000 a year payable from sales less outgoings. However, she was concerned that she might lose her money. Hence Alfred and Beatrice also agreed that they would consult her on any major decisions and that she could inspect the books whenever she wanted to. What is the relationship between Alfred, Beatrice and Coco? Would your answer be different if the $5,000 per annum was to be paid out of profits?
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