Kim Ltd (Kim) is an importer and distributor of laptop computers. Having received numerous complaints in relation to faulty software provided with its laptop computers, Kim engages a software engineering firm named SoftWiz Ltd (SoftWiz) to design a new operating system for their computers.

SoftWiz agrees to design the software for $140,000 and to commence work immediately. Representatives from SoftWiz commit to delivering the finished project by 30 November.

At the end of October, however, it is clear that the software will not be completed by the end of the year, let alone by the deadline. The Chief Executive Officer (CEO) of Kim contacts SoftWiz and demands an explanation.

The software engineers at SoftWiz inform the CEO of Kim that labour costs have risen and that the only way the software will be finished is if Kim agrees to increase the contract price to $180,000. This will enable SoftWiz to employ additional software engineers to write the software and to meet the deadline.

The CEO agrees that Kim will pay the extra amount of $40,000 on top of the original contract price. SoftWiz engages extra computer programmers and manages to complete the software by the 30 November deadline. The CEO, however, refuses to have Kim pay the extra $40,000 promised.

Advise SoftWiz whether Kim is legally bound under the contract to pay the full $180,000. Give reasons for your answer and cite relevant case law. In your answer discuss the issue of intention and consideration.

USE IRAC FORMAT