Facts of the Case:

Supercleen Limited, a manufacturing company, entered into an equipment supply contract with Red Fire Mines Limited, Supercleen agreeing to design supply and install a dust collection system at Red Fire Mine's northern Ontario smelter for a contract price of $200,000.00. The specifications for the dust collection system specified that the dust collection equipment was to remove 98% of prescribed exhaust particles from the exhaust gases in order to comply with the requirements of the environmental control authorities in the area in which the smelter was located.

In addition, the signed contract between Supercleen and Red Fire Mines also contained a provision limiting to $200,000.00, Supercleen's total liability for any loss, damage or injury resulting from Supercleen's performance of design, supply and installation services to Red Fire Mines pursuant to the contract.

The dust collection system as installed by Supercleen did not meet the specifications. In fact, only 60% of the prescribed exhaust particles were removed from the exhaust gases. As a result, Red Fire Mines was faced with the threat of substantial fines and possible shutdown by the environmental control authorities. Supercleen refused to remedy the defective equipment without being assured of compensation from Red Fire Mines of any costs in excess of $200,000.00 incurred in connection with such remedial work.

At the time of discovering that the system failed to meet the specifications, Supercleen had already received $180,000.00 from Red Fire Mines and Red Fire Mines refused to pay anything further to Supercleen.

Red Fire Mines contracted another equipment supplier who, for an additional cost of $275,000.00 successfully designed and installed remedial equipment sufficient to clean the exhaust gases to the satisfaction of the environmental authorities and in accordance with the original contract specifications between Supercleen and Red Fire Mines

Can Red Fire Mines assume that Supercleen has the capacity to fulfill their obligation?