A masterwork item can be infused with magical energies to be made more powerful, but since the Affliction, the magical energies within the world are much harder to control and magical items can fail or break on use.
The mechanism for this is still pretty shaky, but here's a start …
At the end each round of combat (or after a non-combat use of an item), each player draws a card from the tarot deck to determine how their magic items performed during the previous round:
Suit - Relevance
Swords - Melee Weapons
Spears - Ranged Weapons (including wands, staves, and any magical focus item)
Shields - Armor, Shields, any protection magic (capes, rings, etc).
Cups - Misc magic not covered by the above
Major Arcana - special … probably will create a table for these
Card Value - Result
2,3,4,5,6 - failure (for the # of rounds of the card value)
7,8,9,10 - breakage (repair cost equal to item plus * card value * 500 gp; repair time required is a card value * d4 number of days)
P,Kn,Q,K,A - no failure or breakage
When an item has failed, the item still functions as a masterwork item of its kind, but no magical properties are available. When an item breaks, it does not function in any capacity until it is repaired.
If Gabriel has a +3 Holy Longsword and after attacking a green dragon in battle, draws the 4 of Swords, his magical sword has failed and for the next 4 rounds will function as a masterwork longsword, but the +3 bonus is lost and the Holy special ability can not be used.
If Gabriel has a +3 Holy Longsword and after attacking a green dragon in battle, draws the 8 of Swords, his magical sword has broken and until he finds a magical swordsmith capable of repairing the sword and provides the swordsmith with materials valued at 5 (holy(+2) +3 = +5) * 8 (card value) * 500 = 20,000 gp and the repair will take 8d4 days to repair.