Analyze business situations involving contracts and negotiable instruments.

1. StandTallandProsper (STP) is a small publishing company that creates, prints, and sells super hero comic books. For the first few years, sales were at a level that allowed the owner, Drew, and his two employees to easily move the boxes of paper and finished books around by themselves. Now Drew has 30 employees and brings in large pallets of paper and sends out large pallets full of comic books. So far, the company has relied on the paper and transport companies' forklifts to handle the pallets. Given the number of employees, pallets are often in the way when neither company is there to assist in moving them. Drew has decided that, even though it will get light use, it is a good idea for STP to have its own forklift to move pallets out of the way onto the heavy duty shelves that were in the warehouse when STP moved in.

a. Drew considered leasing the forklift, but decided to buy it instead. Identify one advantage for Drew to purchase a forklift and one disadvantage for Drew to purchase a forklift. (1 point)

b. Drew found a reconditioned 3,000 lb. forklift online listed at $12,850. He also saw a couple 5,000 lb. ones close to that price. Before deciding on an offer, Drew called the company selling the 3,000 lb. forklift to learn about its condition. Karen at the forklift company told him it was in excellent shape aside from one bad tire that they would replace before delivery. Drew decided to offer $10,000 for the 3,000 lb. forklift. Karen felt this was too low and countered with $10,500, including delivery of the forklift. She also wants half the cost paid upfront and the other half paid when the forklift is delivered. Drew agrees to pay this using a cashier's check. In the table below, identify the elements from the scenario that make up each step of creating a contract of sale from offer to title transfer. (3 points)

Offer
Acceptance
Contract
Performance
Title Transfer

2. Connie is freelance interior decorator. This week, she provided a waiting room set up (furniture and decorations) for a new doctor's office in town. The agreement with the doctor was that she would pay in full as soon as Connie was finished. The doctor knew the cost would be $87,000 because Connie had bid on the job. Connie asked the doctors to please pay with a check that was more secure than a company check.

a. What type of check would it be best for the doctor to use? Explain your reasoning. (1 point)

b. Why shouldn't the doctor use a traveler's check to pay for the waiting room? (1 point)

3. Find two cases online that show similar situations to the scenarios in Questions 1 and 2 in this section. Use this table to compare the contract arrangements and the use of negotiable instruments between all four cases: the two cases you find and the two scenarios above. (4 points)

	Brief Case Summary	Contract of Sale or Lease?	Negotiable Instruments Used?
Scenario #1: STP buys a used forklift
Scenario #2: Connie, a freelance interior designer, collects on a job
Your Case #1:
Your Case #2: