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C is corrent because, under the doctrine of substantial performance, if it can be shown that the defect in the performance was only minor in nature, that a good-faith effort was made to conform completely with the terms of the agreement, and that the price is decreased by the value of the defect, the contractual obligation will be discharged.
A is incorrect because the doctrine of substantial performance dictates that the value of the defect be deducted from the price.
B is incorrect because Ketchum inadvertently used the wrong materials and thus is said to not have "clean hands." Also, since Ketchum would not be bringing action in an equity court, the equitable doctrine of clean hands would not apply.
D is incorrect because under the doctrine of substantial performance a minor variation of the contract terms does not constitute a breach of contract.