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Cold Case Storage (CCS) provides refrigerated storage facilities for food purveyors. CCS contracts with Igloo Builders Inc. (Igloo) to build five refrigerated warehouses. The contract called for type "A1A" brand insulation so that the warehouse would stay between 35 and 40 degrees with minimal energy. Igloo built the first four warehouses using the A1A insulation, but then ran short of supply. Igloo's construction manager did not want to miss the completion deadline because her bonus depended on timely completion. Therefore, she ordered her workers to substitute B1B insulation for the A1A insulation in the last warehouse. Upon inspection, CCS refused to pay for the final warehouse, citing expert evidence that, because the B1B insulation was not as efficient, the extra costs would total $1,000 (more during peak hot months) per month in cooling costs.

If Igloo files a lawsuit to recover the funds owed for building the last warehouse and CCS points out the B1B defect, what will Igloo's likely theory of the case be? Why?

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Answer:

Igloo’s likely theory of the case would be “Substantial Performance.” They can argue that despite substituting B1B insulation due to supply shortages, they substantially fulfilled their contractual obligations by completing the warehouse. The unforeseen circumstance of A1A insulation shortage supports their case. However, CCS may counter by emphasizing cooling cost differences. For specific legal advice, consult an attorney.

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