No, the rule is not automatically tossed out; it is considered part of the deal. The court explained that when businesses use conflicting forms, there's a special law for the 'battle of the forms.' A new rule, like Gottlieb's 'no lost profits' clause, becomes part of the contract unless it's a 'material alteration,' which means a huge, unexpected change. To prove this, Alps had to show it was a major 'surprise' or caused a 'hardship.' The court decided it wasn't a surprise because the same rule was on all the previous contracts Alps had with Gottlieb, and not reading your contracts isn't a good excuse. It also wasn't an unfair hardship because Alps never told Gottlieb how crucial the fabric was or how much money was at stake. Since Gottlieb had no idea about the huge potential losses, it was fair to enforce the rule that protected them from paying for those losses.

The court made a mistake by not following the part of the contract that limited the kinds of losses Gottlieb would have to pay. That part of the contract was fair and should have been enforced. It wouldn't have been a big surprise or caused major problems for Alps that they couldn't have expected. Alps also didn't prove how much money they really lost in profits. So the court shouldn't have made Gottlieb pay for Alps' lost profits or other kinds of losses that were limited by the contract. But Alps can still get paid back for some direct costs caused by Gottlieb sending the wrong fabric.

We conclude that the lower court made a mistake by not following the part of the contract that limited the kinds of losses Gottlieb would have to pay. That part of the contract was fair and should have been enforced. It wouldn't have been a big surprise or caused major problems for Alps that they couldn't have expected. Alps also didn't prove how much money they really lost in profits. Therefore, the lower court should not have made Gottlieb pay for Alps' lost profits or other losses that the contract limited. But Alps can still get paid back for some direct costs caused by Gottlieb sending the wrong fabric.

I agree with the decision because the court should have followed the contract’s clear rule that limits damages. But I add that we must have strong proof when someone says they were hit with surprise costs because everyone should know what they are agreeing to. My view is a bit different from the majority because I stress the need for clear evidence before blaming a contract change for unexpected problems.

I agree with the outcome because the contract’s limits were clear from the start and should have been followed. However, I believe that when a party claims they faced surprise costs, there must be extra clear proof because that keeps business deals fair. My opinion is a little different from the majority because I stress that simple, strong evidence is needed before saying a change in the contract makes unexpected hardships.

—where the court adopted the Seventh Circuit' s approach that hardship is merely a consequence of surprise

—stating any issue, whether denominated an affirmative defense or a counterclaim, may be tried by implied consent

"[L] ost profits `must be proven with a reasonable degree of certainty before [the loss] is recoverable.'"

—holding that it is an exception to the pleading requirement when there is no objection to evidence introduced solely to prove an unpleaded issue

Absent leave of court to amend the pleadings, the only recognized exception to this rule is when the issue is tried by consent.

In accord with the parties' choice of law, as set forth in the CSA, the court applies Florida law, including the Uniform Commercial Code ("UCC") as codified in the Florida Statutes. See Fla. Stat. ch. 672

An issue is tried by consent when there is no objection to the introduction of evidence on that issue unless the evidence is relevant to other, properly pled issues.'In the instant case, the parties raised the issue in trial briefs, introduced evidence relating to the issue during trial, and argued its merits during closing argument

Moreover, we note that the Association's contentions that it was later blindsided by SHI's claim to enforce the easement and common elements of the governing documents are belied by the record where the Association stipulated to these very issues.

Moreover, because Mr. White timely objected once Ms. White announced her intention to raise "unclean hands" as a defense, it was not tried by consent.

—addresses when a disclaimer of consequential damages clause on the reverse side of a seller's standardized form constitutes an additional term that materially alters the parties' agreement.

No. A limitation of consequential damages clause does not materially alter a contract between merchants under U.C.C. § 2-207 if the party seeking to exclude it fails to prove surprise or hardship. Here, the clause became an enforceable part of the contract. The court's analysis is governed by U.C.C. § 2-207 (the 'battle of the forms'), which dictates that between merchants, additional terms in an acceptance become part of the contract unless they materially alter it. The burden of proof to show a material alteration rests on Alps, the party seeking the term's exclusion. A term materially alters a contract if it results in 'surprise or hardship.' The court, adopting the reasoning from Union Carbide, held that hardship is a consequence of surprise, not an independent criterion. Alps failed to prove surprise because the limitation of liability clause was included in the six previous contracts between the parties; failing to read a contract's terms is not a legally valid excuse. Alps also failed to prove hardship because it never informed Gottlieb of the fabric's specific end-use or the potential for extensive consequential damages, meaning Gottlieb could not have foreseen the magnitude of Alps's losses from a breach. Therefore, the limitation clause was not a material alteration and is an enforceable part of the contract, precluding Alps from recovering consequential damages like lost profits.

The trial court erred by not enforcing the limitation of liability clause because it did not materially alter the contract and should have been enforced. The clause did not result in surprise or hardship that could not have been reasonably anticipated. Lost profits must be proven with a reasonable degree of certainty, which was not done in this case. Alps failed to carry the burden of proving that the limitation of liability clause was an unreasonable surprise or would result in severe economic hardship. Therefore, the award of consequential damages and lost profits must be stricken. However, Alps may still recover direct and incidental damages stemming from Gottlieb's undisputed breach.

I concur with the majority’s judgment reversing the award of consequential damages because the trial court erred by not enforcing the limitation of liability clause, which did not materially alter the contract. However, I emphasize that the burden of proving unexpected economic hardship should be strictly applied because clear, unambiguous evidence is necessary to show that a term imposes an unforeseen detriment. My concurrence differs from the majority in that I place greater focus on the evidentiary requirements and pre-contractual negotiations to prevent speculative claims of hardship.

I join the majority’s conclusion that the trial court erred by not enforcing the limitation of liability clause because the clause was not a material alteration of the agreed contract. Nonetheless, I caution that the standard for demonstrating an unexpected burden must be rigorously met because only unmistakable evidence can justify excluding such contractual terms. My concurrence differs from the majority by stressing that clear and precise proof is essential to support any claim that a party should not be bound by terms that were understood from the outset.

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

Case Podcast

Rule of Law:

The Legal Principle

Facts:

Procedural Posture:

How It Got Here

Issue:

Legal Question at Stake

Opinions:

Majority, Concurrences & Dissents

Analysis:

Why This Case Matters

Gunnerbot