Good Faith Performance and Discharge

Although the ultimate goal of the parties in a contract is to discharge the obligations of the parties by performing as promised, a contract may also be discharged through substantial performance, mutual consent of the parties, or through operation of law. The law also imposes an affirmative duty of fair dealing and good faith in performing obligations, and this underlies all contract transactions.

Read the case below and answer the questions that follow.

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 argues that it substantially performed by using the B1B pipe, what is the best counterargument for CCS that substantial performance did not occur?