October 23, 2008, 10:27 AM — Good news for resellers who feel stifled by "take it or leave it" contracts, takeaways and other actions that diminish revenues. A judge issued a ruling that parts of Cisco's reseller agreement are "unconscionable". The ruling may well set a precedent for all resellers.
The lawsuit, filed by Infra-Comm against Cisco, says that Cisco breached its partner agreement and terms of deal registration, by sending a large deal to AT&T instead. the judge called the reseller contract "one-sided" and found fault with several areas of Cisco's reseller contract. The term of contract was one area the judge found unfair, since the annual renewal does not afford VARs any opportunity to renegotiate any terms. Renewal involves clicking a button on a web site--which may be easy, but creates a "take it or leave it" renewal situation for the reseller. The judge also found fault with Cisco's stipulation that they have "absolute right of termination for no reason" with only 30 days notice. The last item the judge found to be unconscionable was damage limitations.
