diff --git a/basic/tcp-client-server/readme.txt b/basic/tcp-client-server/readme.txt
index 3296d5f5..3567dd93 100644
--- a/basic/tcp-client-server/readme.txt
+++ b/basic/tcp-client-server/readme.txt
@@ -26,3 +26,29 @@ echo:Test
 
 telnet> quit
 Connection closed.
+
+
+Note that the test case also demonstrates error handling on an inbound gateway using direct channels.
+If the payload is 'FAIL', the EchoService throws an exception. The gateway is configured
+with an error-channel attribute. Messages sent to that channel are consumed by a transformer
+that concatenates the inbound message payload with the message text from the thrown 
+exception, returning 'FAIL:Failure Demonstration' over the TCP socket.
+
+This can also be demonstrated with the telnet client thus...
+
+$ telnet localhost 11111
+Trying 127.0.0.1...
+Connected to localhost.
+Escape character is '^]'.
+Hello world!
+echo:Hello world!
+FAIL
+FAIL:Failure Demonstration
+Hello
+echo:Hello
+^]
+
+telnet> quit
+Connection closed.
+
+
diff --git a/basic/tcp-client-server/src/main/java/org/springframework/integration/samples/tcpclientserver/EchoService.java b/basic/tcp-client-server/src/main/java/org/springframework/integration/samples/tcpclientserver/EchoService.java
index 8cf27748..e0015dc9 100644
--- a/basic/tcp-client-server/src/main/java/org/springframework/integration/samples/tcpclientserver/EchoService.java
+++ b/basic/tcp-client-server/src/main/java/org/springframework/integration/samples/tcpclientserver/EchoService.java
@@ -24,8 +24,11 @@ package org.springframework.integration.samples.tcpclientserver;
  */
 public class EchoService {
 
-	public String test(byte[] bytes) {
-		return "echo:" + new String(bytes);
+	public String test(String input) {
+		if ("FAIL".equals(input)) {
+			throw new RuntimeException("Failure Demonstration");
+		}
+		return "echo:" + input;
 	}
 
 }
\ No newline at end of file
diff --git a/basic/tcp-client-server/src/main/java/org/springframework/integration/samples/tcpclientserver/SimpleGateway.java b/basic/tcp-client-server/src/main/java/org/springframework/integration/samples/tcpclientserver/SimpleGateway.java
index e5ee0b47..df7d1b51 100644
--- a/basic/tcp-client-server/src/main/java/org/springframework/integration/samples/tcpclientserver/SimpleGateway.java
+++ b/basic/tcp-client-server/src/main/java/org/springframework/integration/samples/tcpclientserver/SimpleGateway.java
@@ -21,6 +21,6 @@ package org.springframework.integration.samples.tcpclientserver;
  */
 public interface SimpleGateway {
 
-	public byte[] send(String text);
+	public String send(String text);
 	
 }
\ No newline at end of file
diff --git a/basic/tcp-client-server/src/main/resources/META-INF/spring/integration/tcpClientServerDemo-context.xml b/basic/tcp-client-server/src/main/resources/META-INF/spring/integration/tcpClientServerDemo-context.xml
index dc2abdf5..e4d865c9 100644
--- a/basic/tcp-client-server/src/main/resources/META-INF/spring/integration/tcpClientServerDemo-context.xml
+++ b/basic/tcp-client-server/src/main/resources/META-INF/spring/integration/tcpClientServerDemo-context.xml
@@ -25,10 +25,15 @@
 	
 	<ip:tcp-outbound-gateway id="outGateway"
 		request-channel="input"
+		reply-channel="clientBytes2StringChannel"
 		connection-factory="client"
 		request-timeout="10000"
 		reply-timeout="10000"
 		/>
+
+	<transformer id="clientBytes2String"
+		input-channel="clientBytes2StringChannel"
+		expression="new String(payload)"/>
 		
 	<!-- Server side -->
 	
@@ -38,7 +43,8 @@
 			
 	<ip:tcp-inbound-gateway id="gatewayCrLf"
 		connection-factory="crLfServer"
-		request-channel="toSA" />
+		request-channel="serverBytes2StringChannel" 
+		error-channel="errorChannel"/>
 		
 	<channel id="toSA" />
 
@@ -50,4 +56,13 @@
 	<beans:bean id="echoService" 
 		  class="org.springframework.integration.samples.tcpclientserver.EchoService" />
 		  
+	<transformer id="serverBytes2String"
+		input-channel="serverBytes2StringChannel"
+		output-channel="toSA" 
+		expression="new String(payload)"/>
+		
+	<transformer id="errorHandler"
+		input-channel="errorChannel"
+		expression="payload.failedMessage.payload + ':' + payload.cause.message"/>
+		  
 </beans:beans>
diff --git a/basic/tcp-client-server/src/test/java/org/springframework/integration/samples/tcpclientserver/TcpClientServerDemoTest.java b/basic/tcp-client-server/src/test/java/org/springframework/integration/samples/tcpclientserver/TcpClientServerDemoTest.java
index 504441cf..d4c645e7 100644
--- a/basic/tcp-client-server/src/test/java/org/springframework/integration/samples/tcpclientserver/TcpClientServerDemoTest.java
+++ b/basic/tcp-client-server/src/test/java/org/springframework/integration/samples/tcpclientserver/TcpClientServerDemoTest.java
@@ -42,10 +42,17 @@ public class TcpClientServerDemoTest {
 	SimpleGateway gw;
 	
 	@Test
-	public void test() {
-		byte[] echo = gw.send("Hello world!");
-		String result = new String(echo);
+	public void testHappyDay() {
+		String result = gw.send("Hello world!");
 		System.out.println(result);
 		assertEquals("echo:Hello world!", result);
 	}
+	
+	@Test
+	public void testFail() {
+		String result = gw.send("FAIL");
+		System.out.println(result);
+		assertEquals("FAIL:Failure Demonstration", result);
+	}
+
 }