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P is a fabric converter. D is a manufacturer of medical devices and produces various types of liners that amputees use to attach prosthetic devices. D used liners that consisted of a specially designed gel material covered in spandex fabric that stretched to allow the liner to be placed over the appendage and then compressed to provide stability. D began testing a number of new fabrics hoping to develop a new product possessed of enhanced durability and stability. D settled on a specialty fabric provided by P identified as Coolmax. D began incorporating the new fabric into its liners. It generated positive feedback from customers. D rejected some fabric samples because of unacceptable inconsistencies in both color and texture. D sent a letter promptly notifying P of the product deficiencies and stating that any future commercial relationship mandated that P provide a more consistent product. The letter did not inform P of the possibility that D could incur substantial additional costs as a result of using a different fabric. P did not disclose the specialized use of the fabric to P. P agreed to rework the fabric before delivering it to D. P exhausted its supply of the yarn used to produce the specialized high-tech fabric. It substituted another fabric without notifying D of the substitution. This substitution caused a defect that was not easily discoverable by D. The new fabric did not stretch as well as the original. D began receiving complaints from customers. D had to recall the liners it had placed on the market and destroy the devices in its inventory. P sued for nonpayment of bills. D counterclaimed for breach of warranty. The trial court awarded damages to P on its claim totaling $28,846.29 and damages to D on its counterclaim of $694,640.04. If found the limitation of liability clause in the contract was a material alteration of the parties' contract. The trial court declined to enforce the provision concluding that by operation of law, it was not a part of the contract.

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