diff --git a/.gitignore b/.gitignore
index 9d40291..72bfeb3 100644
--- a/.gitignore
+++ b/.gitignore
@@ -1,4 +1,8 @@
 node_modules
 .idea
 .nul
+.hgignore
+.hgsubstate
+.hg
+.hgsub
 test/npm-debug.log
\ No newline at end of file
diff --git a/lib/vows.js b/lib/vows.js
index cfbc91f..cfc789f 100644
--- a/lib/vows.js
+++ b/lib/vows.js
@@ -64,6 +64,9 @@ function addVow(vow) {
 
     // always set a listener on the event
     this.on(event, function () {
+        if(vow.caughtError)
+            return;
+
         var args = Array.prototype.slice.call(arguments);
         // If the vow is a sub-event then we know it is an
         // emitted event.  So I don't muck with the arguments
@@ -80,6 +83,7 @@ function addVow(vow) {
 
     if (event !== 'error') {
         this.on("error", function (err) {
+            vow.caughtError = true;
             if (vow.callback.length >= 2 || !batch.suite.options.error) {
                 runTest(arguments, this.ctx);
             } else {
diff --git a/lib/vows/extras.js b/lib/vows/extras.js
index a90d7a5..a6345f4 100644
--- a/lib/vows/extras.js
+++ b/lib/vows/extras.js
@@ -1,6 +1,6 @@
 var events = require('events');
 //
-// Wrap a Node.js style async function into an EventEmmitter
+// Wrap a Node.js style async function into an EventEmitter
 //
 this.prepare = function (obj, targets) {
     targets.forEach(function (target) {
diff --git a/lib/vows/reporters/xunit.js b/lib/vows/reporters/xunit.js
index 411a948..45d9b6c 100644
--- a/lib/vows/reporters/xunit.js
+++ b/lib/vows/reporters/xunit.js
@@ -4,7 +4,9 @@
 // added, see: http://ant.1045680.n5.nabble.com/schema-for-junit-xml-output-td1375274.html
 //
 
-var puts = require('util').puts;
+var options = { tail: '\n', raw: true };
+var console = require('../../vows/console');
+var puts = console.puts(options);
 
 var buffer       = [],
     curSubject   = null;
@@ -47,6 +49,9 @@ function cdata(data) {
 }
 
 this.name = 'xunit';
+this.setStream = function (s) {
+  options.stream = s;
+};
 this.report = function (data) {
     var event = data[1];
 
diff --git a/lib/vows/suite.js b/lib/vows/suite.js
index 014571f..2d4e200 100644
--- a/lib/vows/suite.js
+++ b/lib/vows/suite.js
@@ -129,13 +129,14 @@ this.Suite.prototype = new(function () {
                 }
 
                 // Run the topic, passing the previous context topics
-                // If topic `throw`s an exception, pass it down as a value
                 try {
                     topic = topic.apply(ctx.env, ctx.topics);
                 }
+                // If an unexpected error occurs in the topic, set the return
+                // value to 'undefined' and call back with the error
                 catch (ex) {
-                    if(/ReferenceError/.test(ex)) throw ex;
-                    topic = ex;
+                    ctx.env.callback(ex);
+                    topic = undefined;
                 }
 
                 if (typeof(topic) === 'undefined') { ctx._callback = true }
@@ -229,13 +230,17 @@ this.Suite.prototype = new(function () {
                     if (topic &&
                         ctx.name !== 'on' &&
                         (!topic._vowsEmitedEvents || !topic._vowsEmitedEvents.hasOwnProperty(ctx.event))) {
-                        topic.on(ctx.event, function (ctx) {
-                            return function (val) {
-                                return run(new(Context)(vow, ctx, env), lastTopic);
+                        var runInnerContext = function(ctx){
+                            return function(val){
+                                return run(new (Context)(vow, ctx, env), lastTopic);
                             };
-                        }(ctx));
-                    } else {
-                        run(new(Context)(vow, ctx, env), lastTopic);
+                        }(ctx);
+                        topic.on(ctx.event, runInnerContext);
+                        // Run an inner context if the outer context fails, too.
+                        topic.on('error', runInnerContext);
+                    }
+                    else {
+                        run(new (Context)(vow, ctx, env), lastTopic);
                     }
                 }
             });
diff --git a/test/vows-error-test.js b/test/vows-error-test.js
index 79afaba..25fe300 100644
--- a/test/vows-error-test.js
+++ b/test/vows-error-test.js
@@ -2,7 +2,8 @@ var path   = require('path'),
     events = require('events'),
     assert = require('assert'),
     fs     = require('fs'),
-    vows   = require('../lib/vows');
+    vows   = require('../lib/vows'),
+    silent = require('../lib/vows/reporters/silent');
     
 function doSomethingAsync(callback) {
   	var err = null;
@@ -48,4 +49,74 @@ vows.describe('vows/error').addBatch({
     			  assert.equal(testValue, 'a');
     		}
   	}
-}).export(module)
\ No newline at end of file
+}).export(module)
+
+vows.describe('Error Handling').addBatch({
+    "A topic with a function that errors": {
+        topic: function() {
+            throw("Something wrong here");
+        },
+        "should return an error to a vow with two parameters": function(e, data) {
+            assert.equal(e, "Something wrong here");
+        }
+    },
+    "A topic with a built-in error": {
+        topic: function() {
+            bad.bad;
+        },
+        "should return an error to a vow with two parameters": function(e, data) {
+            assert(e instanceof Error, "Return value " + e + " wasn't an Error.");
+        }
+    },
+    "The previous two topics run in their own suite," : {
+        "connected to two vows expecting one argument each" : {
+            topic: function(){
+                vows.describe().addBatch({
+                    "A topic with a function that errors": {
+                        topic: function() {
+                            throw("Something wrong here");
+                        },
+                        "should record the error in the test results" : function(data) {
+                            assert.ok(!data);
+                        }
+                        //» An unexpected error was caught: "Something wrong here"
+                    },
+                    "A topic with a built-in error": {
+                        topic: function() {
+                            bad.bad;
+                        },
+                        "should record the error in the test results" : function(data) {
+                            assert.ok(!data);
+                        }
+                        //» An unexpected error was caught: ReferenceError: bad is not defined
+                    }
+                }).run({reporter : silent}, this.callback);
+            },
+            "should have an errored count of two" : function(results, unused) {
+                assert.equal(results.errored, 2);
+            },
+            "should have a total count of two" : function(results, unused) {
+                assert.equal(results.total, 2);
+            },
+            "should have an honored count of zero" : function(results, unused){
+                assert.equal(results.honored, 0);
+            }
+        }
+    },
+    "A topic with an error in it" : {
+        topic : function(){
+            throw('awesome');
+        },
+        "should error" : function(error, result){
+            assert.equal(error, 'awesome');
+        },
+        "containing a subtopic" : {
+            topic : function(){
+                return 52;
+            },
+            "should reach a vow in the subtopic" : function(){
+            }
+        }
+    }
+}).export(module);
+
diff --git a/test/vows-test.js b/test/vows-test.js
index d539a54..bcb5134 100644
--- a/test/vows-test.js
+++ b/test/vows-test.js
@@ -168,15 +168,7 @@ vows.describe("Vows").addBatch({
             "should work as expected": function (topic) {
                 assert.isFunction(topic);
                 assert.equal(topic(), 42);
-            },
-        }
-    },
-    "A topic with a function that errors": {
-        topic: function() {
-            throw("Something wrong here");
-        },
-        "should error out": function(topic) {
-            assert.equal(topic, "Something wrong here");
+            }
         }
     },
     "A topic emitting an error": {