https://www.channelfutures.com/wp-content/themes/channelfutures_child/assets/images/logo/footer-new-logo.png
  • Home
  • Technologies
    • Back
    • SDN/SD-WAN
    • Cloud
    • RMM/PSA
    • Security
    • Telephony/UC/Collaboration
    • Cable
    • Mobility & Wireless
    • Fiber/Ethernet
    • Data Centers
    • Backup & Disaster Recovery
    • IoT
    • Desktop
    • Artificial Intelligence
    • Analytics
  • Strategy
    • Back
    • Mergers and Acquisitions
    • Channel Research
    • Business Models
    • Distribution
    • Master Agents
    • Sales & Marketing
    • Best Practices
    • Vertical Markets
    • Regulation & Compliance
    • Diversity & Inclusion
  • MSSP Insider
  • MSP 501
    • Back
    • Apply Now
    • 2020 MSP 501 Rankings
    • 2020 Hot 101 Rankings
    • 2020 MSP 501 Report
  • Intelligence
    • Back
    • Galleries
    • Podcasts
    • Videos
    • From the Industry
    • Reports/Digital Issues
    • Webinars
    • White Papers
    • Channel Educational Series
  • EMEA
  • Channel Chatter
    • Back
    • People on the Move
    • New/Changing Channel Programs
    • New Products & Services
    • Industry Honors
    • Channel Convergence
  • Resources
    • Back
    • Advisory Boards
    • Industry Organizations
    • Our Sponsors
    • Content Resources
  • Awards
    • Back
    • 2021 MSP 501
    • Circle of Excellence
    • Excellence in Digital Services
    • Top Gun 51
  • Events
    • Back
    • CP Conference & Expo
    • Channel Evolution Europe
    • Channel Partners Event Coverage
    • Webinars
    • Industry Events
  • DE&I
Channel Futures
  • NEWSLETTER
  • Home
  • Technologies
    • Back
    • SDN/SD-WAN
    • Cloud
    • RMM/PSA
    • Security
    • Telephony/UC/Collaboration
    • Cable
    • Mobility & Wireless
    • Fiber/Ethernet
    • Data Centers
    • Backup & Disaster Recovery
    • IoT
    • Desktop
    • Artificial Intelligence
    • Analytics
  • Strategy
    • Back
    • Mergers and Acquisitions
    • Channel Research
    • Business Models
    • Distribution
    • Master Agents
    • Sales & Marketing
    • Best Practices
    • Vertical Markets
    • Regulation & Compliance
    • Diversity & Inclusion
  • MSSP Insider
  • MSP 501
    • Back
    • Apply Now
    • 2020 MSP 501 Rankings
    • 2020 Hot 101 Rankings
    • 2020 MSP 501 Report
  • Intelligence
    • Back
    • Galleries
    • Podcasts
    • Videos
    • From the Industry
    • Reports/Digital Issues
    • Webinars
    • White Papers
    • Channel Educational Series
  • EMEA
  • Channel Chatter
    • Back
    • People on the Move
    • New/Changing Channel Programs
    • New Products & Services
    • Industry Honors
    • Channel Convergence
  • Resources
    • Back
    • Advisory Boards
    • Industry Organizations
    • Our Sponsors
    • Content Resources
  • Awards
    • Back
    • 2021 MSP 501
    • Circle of Excellence
    • Excellence in Digital Services
    • Top Gun 51
  • Events
    • Back
    • CP Conference & Expo
    • Channel Evolution Europe
    • Channel Partners Event Coverage
    • Webinars
    • Industry Events
  • DE&I
    • Newsletter
  • REGISTER
  • MSPs
  • VARs / SIs
  • Agents
  • Cloud Service Providers
  • Channel Partners Events
 Channel Futures

Telephony/UC/Collaboration


Carriers Liable for Agents, Court Says

  • Written by Neil
  • July 28, 2008

A judge in the federal District Court for the District of Maryland ruled agents/distributors of telecommunications services can be the lawful agents of the carrier supplying the underlying telecommunications services. The significance of this ruling is that the supplying carrier can be held legally liable for the breach of contract, tortious conduct or other unlawful acts of their distributors and for the damages that result.

Liability Provisions

Most carrier reseller/agent agreements don’t mention a quality commitment, but include an abundance of terms meant to ensure the carrier does not commit to any standard of service or other performance quality and that it is never subject to any liability for the failure of its service or its bad acts. These provisions appear in many forms, including limitations of liability, warranty disclaimers, indemnifications, preclusions of third-party beneficiaries and force majeure clauses, just to mention a few.

The purpose of these provisions is twofold:

● One, to use the contracting process to “wall off” the carrier from any real obligation to provide a definable quality of service and from most — if not all — responsibility for service failures;

● Two, to create the firm impression in the mind of the purchasing reseller, agent/distributor or end user that it is useless to attempt to obtain relief against any bad act committed by a carrier.

The truth is, while provisions limiting the nature and scope of carrier liability are very troubling and can be a substantial shield against liability, they are most certainly not inviolate. They can be sharply limited in scope and, in some instances, defeated entirely. For example, in many states common law can prevent the enforcement of exculpatory clauses, such as limitations of liability, where the complaining party can show the carrier’s conduct was grossly negligent, willful or where the enforcement of the clause would be unconscionable. Also, many states statutes prevent a waiver of certain warranties under certain circumstances.

Not only have carriers used their contracts to limit their obligations and exposure to their direct customers, they also have taken the position they cannot be held liable to their downstream distributors for the failures of their services or the bad acts of their “distributors.” In short, their claim is based on the assertion the distributors are not their “agents” and, thus, they are not liable for their bad acts. These claims, which have been used to deter many legal actions, have allowed carriers to benefit directly from the sales activities of their distributors, but to wall themselves off from liability when the distributor engages in bad acts at the behest of or in concert with the underlying carrier.

Limit Liability

In the Maryland case, the judge kicked over that wall. Significantly, the judge also rejected outright the carriers’ arguments that the federal court did not have jurisdiction over them, as out-of-state companies, as a result of their sales through third-party distributors in Maryland. The judge concluded these sales, along with the other conduct of the carriers, created sufficient contacts between the carriers and the State of Maryland to justify the assertion of jurisdiction.

These rulings are significant as they directly rebuff positions typically taken by carriers that they are immune from liability to downstream distributors for the conduct of their “independent” distributors where they sell services through such distributors. Subdistributors and other parties purchasing may now proceed with greater confidence against their underlying carriers as well as against their upstream distributor where the distributor acts in violation of their agreement or its conduct is otherwise unlawful.

The case has yet to reach the point where a determination is made as to whether the distributor-defendants are, in fact, the agents of the carriers. However, the carriers’ motions to dismiss were each denied suggesting other distributors no longer need be afraid to seek legal recourse against the carriers providing the underlying telecommunications services and that carriers must now pay more close attention to the conduct of their distributors and to the complaints of their subdistributors.

The lesson for agents:

● First, read your carrier agreements carefully and do everything you can to remove or limit the scope and effect of clauses that unfairly limit the liability of a providing carrier. These clauses can be negotiated and a fair balance can be struck.

● Second, if the conduct of a carrier or an upstream distributor has caused you damage, do not fold your tent when confronted with the inevitable and aggressive assertion you have no legal claims or right to relief.

Distributors and end users can climb over the liability wall and carriers would be well-advised to understand their actual exposure and to engage reasonably to resolve service and liability issues.

Neil S. Ende is the founder of and a partner in Technology Law Group LLC, a Washington, D.C.-based telecommunications law firm. He can be reached by phone at +1 202 895 1707 and by e-mail at nende@tlgdc.com. Further information on this issue can be found at TLG’s blogsite, www.telecomandtechnologylawblog.com.

Looking for More?

Get more advice on agent contracts at a session led by the author, Neil S. Ende, at the Fall 2008 Channel Partners Conference & Expo in Boston. “Analyzing Agent Agreements” will take place at 10:30 a.m., Tuesday, Aug. 19. For more information about the event, visit www.channelpartnersconference.com.

Tags: Agents Telephony/UC/Collaboration

Related


  • Roll Out the Red Carpet
    Ziply Fiber Rolls Out Agent Program with AppSmart, Intelisys, Telarus
    Having acquired Frontier's assets in the Northwest, Ziply Fiber's partner program will be watched closely by agents.
  • Cash, U.S. currency
    AT&T, Comcast, Cisco, Microsoft, 8x8 Unveil New Products, Services
    Read about the latest offerings you can sell.
  • Customer care
    8x8 Adds Birdeye, RingCentral Vet as Chief Customer Officer
    8x8's latest hire has an extensive history in the channel.
  • Close-up of call center agent
    Vonage Contact Center Gets Video, AI Enhancements
    You'll be surprised to learn how many people now prefer to connect on video.

Leave a comment Cancel reply

-or-

Log in with your Channel Futures account

Alternatively, post a comment by completing the form below:

Your email address will not be published. Required fields are marked *

Related Content

  • Judge: Charter Must Pay Windstream $19 Million for 'Egregious,' Deceptive Mailer
  • Ujet, Peerless Network Enter Master Agent Agreements with PlanetOne, Intelisys
  • Agents Voice Concerns, Hopes for Master Agent Consolidation
  • AT&T Adds Mobile Cloud PBX to RingCentral-Powered Collaboration Solution

Galleries

View all

Biden Administration Issues Russian Sanctions in Response to SolarWinds Hack, Election Interference

April 16, 2021

Industry Perspectives

View all

SD-WAN Supports More Purposeful Shift to Cloud

April 16, 2021

How Tech Is Transforming Public Safety–and the Implications for Channel Partners

April 15, 2021

Exercising Your Organization’s Data Loss Recovery Abilities

April 13, 2021

Webinars

View all

What to Look For: 2021 Threat Report

April 22, 2021

Health Care and SD-WAN: A Seller’s Guide

April 27, 2021

How MSPs Can Leverage SOCaaS to Improve Security & Grow Revenue

May 4, 2021

White Papers

View all

Carbonite Data Protection and Cyber Resilience

April 15, 2021

Top Tips: How Resellers Can Leverage Rackspace to Enhance Customer’s Cyber Security Protection with Microsoft 365 Security

March 30, 2021

Top Tips: Optimize Your Microsoft 365 Investment with Rackspace Technology

March 30, 2021

Upcoming Events

View all

Channel Partners Conference & Expo

November 1, 2021 - November 4, 2021

MSP Summit

November 1, 2021 - November 2, 2021

Channel Evolution Europe

November 30, 2021 - December 1, 2021

Videos and Fastchats

View all

5 Reasons Diversity, Equity and Inclusion Is Important

Five9 Shares Insights on Implementing a DE&I Strategy

April 13, 2021

FASTCHAT: How Fortinet Reduces Complexity Through Networking, Security

March 31, 2021

Strong Customer Experience Needs Strong Partner Experience

December 22, 2020

Twitter

ChannelFutures

If you needed any more reason to submit your @MSP_501 application, this promotional video will get you fired up!… twitter.com/i/web/status/1…

April 16, 2021
ChannelFutures

.@FrontierCorp just weeks away from exiting #Chapter11bankruptcy. dlvr.it/RxqkK1 https://t.co/yxyChKL9Um

April 16, 2021
ChannelFutures

#SDWAN supports a more purposeful shift to the #cloud @ComcastBusiness #networksecurity #hybridwork #security #SaaS… twitter.com/i/web/status/1…

April 16, 2021
ChannelFutures

RT @alysfitz: 67% of respondents reported burning out since the COVID-19 pandemic hit. We need to do better to support #WomenInTech, especi…

April 16, 2021
ChannelFutures

RT @AllianceofCW: #ACW members Mayka Rosales-Peterson and Raquel Wiley were elected to @ChannelFutures' #Diversity, #Equity, & #Inclusion B…

April 16, 2021
ChannelFutures

.@ZiplyFiber rolls out agent #partnerprogram. #networking dlvr.it/RxmM4K

April 16, 2021
ChannelFutures

New #Microsoft #SurfaceLaptop4 is an incremental update with an improved CPUs webcam, speakers and dual mics.… twitter.com/i/web/status/1…

April 16, 2021
ChannelFutures

.@okta hires @InsightEnt vet as global channel chief. #cybersecurity dlvr.it/RxmM20 https://t.co/ImWRZp2qHt

April 16, 2021

MSSP Insider

Business advice for MSSPs and news from the broader security channel.

Newsletters and Updates

Sign up for The Channel Report, Channel Futures Update, MSP 501 Newsletter and more.

Live Channel Events

Get the latest information on the next industry-leading Channel Partners event.

Galleries

Educational slide shows and images from live events.

Media Kit And Advertising

Want to reach our audience? Access our media kit.

DISCOVER MORE FROM INFORMA TECH

  • Channel Partners Events
  • Telecoms.com
  • MSP 501
  • Black Hat
  • IoT World Today
  • Omdia

WORKING WITH US

  • Contact
  • About Us
  • Advertise
  • Newsletter

FOLLOW Channel Futures ON SOCIAL

  • Privacy
  • CCPA: “Do Not Sell My Data”
  • Cookie Policy
  • Terms
Copyright © 2021 Informa PLC. Informa PLC is registered in England and Wales with company number 8860726 whose registered and Head office is 5 Howick Place, London, SW1P 1WG.
This website uses cookies, including third party ones, to allow for analysis of how people use our website in order to improve your experience and our services. By continuing to use our website, you agree to the use of such cookies. Click here for more information on our Cookie Policy and Privacy Policy.
X