Paul Gottlieb & Co., Inc. v. Alps South Corp.

Facts

Alps South Corporation (“Alps”) (defendant) manufactured medical devices and also produced liners for prosthetic devices. Alps contracted to use a new specialty fabric from Paul Gottlieb & Company, Inc. (“Gottlieb”) (plaintiff) for the production of prosthetic devices. The parties exchanged their own standardized forms. Gottlieb’s form contained a a limitation of liabilities clause that shielded it from liability for consequential damages, but Alps did not read the clause. The parties’ business relationship later deteriorated. Alps became unsatisfied in the deficiencies in the fabric and also received complaints from customers that the fabric was less comfortable. The problems with the fabric became so severe that Alps recalled its products and destroyed the remaining devices in its inventory. When Gottlieb sent Alps a bill, Alps failed to pay. Gottlieb sued to collect damages due to the nonpayment. Gottlieb asserted that the clause on the back of its finished goods contract limited its liability for consequential damages. The trial court concluded the clause was a material alteration and was not part of the contract.