Reference no: EM132403566

1. King Industries Ltd. contracted with Johnson Labs to install a thermal cold room in Johnson's facility for a total cost of $150,000. Johnson has paid King $120,000 on the contract to date. The contract stated that Johnson's own workers were to install all mechanical and electrical requirements to the point of hook up, but the contract also stipulated that the "final tie in of the equipment is to be completed by the contractor (King)".

The condenser unit was originally supposed to be installed inside the cold room, beside the main control unit. However, configuration of the room made that impossible - there was no space for the condenser unit. It therefore had to be relocated to the roof. In order for the main unit and the condenser to communicate with each other and regulate temperature, thermal controls had to tie in between the two units, which were no longer side by side. One unit was in the room and the other on the roof. King did not have the expertise to do the tie in because the units were now physically separated. Johnson's own facility workers did the tie in at an extra cost to Johnson (overtime charges). King is now demanding payment of the remaining $30,000 on the contract. Johnson does not want to pay because it cost them an extra $17,000 in overtime for its workers to complete the tie in of the components.

You are Johnson's lawyer. What advice do you give your client in the face of King's demand for payment?