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Case Study Example: STAR, Ltd. v. NELSON TILE, Inc.

5 pages
1278 words
University of California, Santa Barbara
Type of paper: 
Case study
This essay has been submitted by a student. This is not an example of the work written by our professional essay writers.

The construction site of this case study is Northeast Independent School District. Just like any other construction contracts, the school had to give bids and select the most favorable bidder. STAR ltd was chosen by the school to oversee the construction. Star been the primary contractor reviewed and analyzed the architectural plans and later tendered a bid whereby NELSON TILE won the contract. The two companies visited the site and made their size estimation. According to Star, the kitchen size was approximately 3,500 square feet while Nelson estimated it to be 4,000 square feet. Before beginning any construction tender, the involved parties should together visit the site and measure the actual area to decide on the cost, time and resources to be used (Adriaanse 2016).

A contract is a voluntary agreement between two or more parties whereby they must all perform to accomplish the task ahead. Based on the legal/ law of contract every agreement has elements which guide the involved parties. Firstly, an offer whereby a party makes a promise to perform a specific task. In this case, there are two offers: between the Northeast Independent school versus STAR ltd and STAR ltd versus NELSON TILE ltd (Klee, 2015). The second element is consideration whereby the involved parties promise something of value to each other. NELSON TILE vowed to provide the best renovation service with quality materials.

Thirdly, an acceptance expressed via actions and words. Acceptance is by the terms and conditions of the offer. The contract began when the NELSON TILE accepted the offer and the conditions attached to the deal. Lastly, the element of mutuality of obligation brings the parties into agreement. Every legal agreement must meet the features above for it to be bidding. Failure to comply with the conditions might cause the problem leading to poor performance or termination of the contract (Robertson, 2016).

The main issue that arose during the construction was the time limit set aside to complete the renovation. According to Nelson, the Star Company failed to observe the agreed schedule and start the installation on time. STAR ltd also was unable to design an accurate program based on the size of the renovation and the requirement. Time limit and resources are the determinacies of successful repair (Hunter 2017). On the other hand, the STAR blamed NELSON for supplying few workforce to work on the renovation. They argued that supply of skilled workers could have performed better.

Between NELSON TITLE versus STAR ltd who failed to honor the contract leading to poor performance? Who among them is the primary root of the problem? According to the law of contract, the main contractor should set the time limit and issue all the resources required to accomplish the work to the awarded bidder. NELSON TILE failed to set strict time limit and provide material on time to the STAR ltd. At the same time, STAR ltd did not issue a complete scope of work to the NELSON ltd that why they never accepted the changes brought. The arguments raised by NELSON TILE are more convincing and persuasive. In his case, he outlines the terms and conditions of the contract which he had to abide. NELSON TILE limited adhered to the laws of contract by using the resources provided by Star. They tried, by all means, to comply with the agreement by accepting to use the epoxy grout which was not included in the specification (O'Sullivan & Hilliard 2016).

The arguments of the STAR ltd were less persuasive since they did not issue the requirements for the contract. Though they blamed the Nelson ltd for failure to complete the task on time, they failed to design the schedule well which the renovators could have adhered to. Still, they omitted the specification on use of epoxy grout which they later ordered Nelson to use. The two parties never cooperated to resolve the issue.

In case of a disagreement or misunderstanding at the course of carrying out a task, the parties involved should communicate and solve the issue at hand. Where written communication fail, the parties ought to meet face to face and solve the problem by themselves or involve a neutral body like court or mediator. In this case, the Star and Nelson ltd failed to have an efficient and productive communication hence the failure to perform as expected. The parties are supposed to work in good faith and fair performance (Thomas & Wright 2016). The termination of the contract by STAR escalated more problems due to its failure to honor the terms of the agreement. The company will end up losing trust not only from the NELSON TILE and the school but also on the society. No other construction company in the area will agree to take the bid from them. On the other hand, NELSON TILE will end up losing the contract. It has to pay for the personnel and resources used which is a loss to the company. The termination also affects the school since it had a time limit to ensure full renovation of the building. The school stakeholders may end up losing trust in the school management.

The best action that STAR could have taken is to give NELSON TILE another chance to oversee full renovation and repairs. NELSON TILE was very willing to redo the work and honor the contract while Star denied them a chance to make things right. On the other side before suing the company, NELSON TILE could have requested the Star to hold a meeting and try to resolve the issue to complete the contact. Effective communication and collaboration are essential in any contract s it eases the tension and creates understanding (Thomas & Wright 2016).


The STAR ltd is the source of the problem and highest contributor to the failure of the contract. At the first place, the company failed to provide all detailed information necessary to oversee the full renovation. It never managed its schedule well from the beginning and provide materials on time thus making it hard for the NELSON TILE to provide quality service. It is the mandate of Star to repay NELSON ltd for the time wasted and the resources used in the course of the renovation contract (Hobbes, 2013).

The case of Bell V. Lever Brothers Ltd it was agreed that in case of a typical situation where one party is aware of information and fail to share with the other, the cost of breach would be repaid by that party (Field 2016). With this in mind, the STAR ltd is the bearer of breach of contract. Similarly, the STAR Company can opt to continue or renew the contract with NELSON ltd and oversee full renovation process by ensuring effective communication and collaboration. According to the law of contract, a mutual mistake affects both parties and the best decision is for the party to collaborate and work together until the end of the contract.



Adriaanse, M. J. (2016). Construction contract law. Palgrave Macmillan.

Appleman, J. A., Appleman, J., & Holmes, E. M. (2016). Contract Concerns: Reinsurance Contract Formation, Validity, And Judicial Construction (Vol. 14). Appleman on Insurance Law and Practice

Field, S. (2016). Introduction to the Law of Contract: Formation of a Contract.

Hobbes, T. (2013). Elements of law, natural and political. Routledge.Hunter, H. (2017). Modern Law of Contracts.

Klee, L. (2015). International construction contract law. John Wiley & Sons.

Knapp, C. L., Crystal, N. M., & Prince, H. G. (2016). Problems in Contract Law: cases and materials. Wolters Kluwer Law & Business.

O'Sullivan, J., & Hilliard, J. (2016). The law of contract. Oxford University Press

Robertson, A. (2016). The limits of interpretation in the law of contract. Victoria U. Wellington L. Rev., 47, 191.

Thomas, R. W., & Wright, M. (2016). Construction contract claims. Palgrave Macmillan.


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