Facts
My client was a Series A software-as-a-service company selling a workflow product to mid-market enterprise customers. A regional channel reseller had been the company's authorized reseller in one geographic territory for roughly two years under a standard channel reseller agreement. One of the reseller's end customers brought a breach claim against the reseller alleging that the SaaS product had failed to perform as the reseller had described in its sales materials. The end customer's claim was in the low six figures.
The reseller turned around and demanded that my client indemnify the reseller in full, citing the indemnity clause in the channel reseller agreement. The channel reseller agreement did include an indemnity, but the indemnity expressly carved out claims arising from the reseller's own statements, marketing materials, or representations made beyond the licensed marketing collateral. The end customer's complaint, when read closely, was framed around the reseller's pre-sale promises rather than around the underlying SaaS product.
What I did
I read the channel reseller agreement clause by clause, with particular attention to the indemnity, the limitation of liability, and the integration of marketing materials. I cross-referenced the indemnity language against the actual complaint the end customer had filed against the reseller and built a chart matching each numbered allegation in the complaint to either the carve-out or the covered scope of the indemnity. The chart showed that all but one of the allegations described the reseller's own pre-sale statements, not the product's underlying performance.
I drafted a written response to the reseller's tender of defense on attorney letterhead, declined the tender on the basis of the carve-out, walked through the chart in the body of the letter, and proposed a narrow cost-sharing arrangement on the single allegation that touched product performance. I copied the engagement letter language defining scope so the reseller's general counsel could see I was acting within a written engagement.
Outcome
After the written tender response and a follow-on exchange between counsel, the reseller withdrew the full-indemnity demand. The two parties agreed in writing to a limited cost-share on the single product-performance allegation, capped at a low five-figure number. My client did not pay for the marketing-statement allegations and the underlying customer matter was resolved by the reseller without further escalation against my client. Each matter turns on its facts; the outcome here does not predict the outcome on a similarly framed dispute.
Lesson
A SaaS channel reseller agreement that does not carve marketing statements out of indemnity quietly converts the SaaS vendor into the underwriter of every overpromise the reseller's sales team makes. The carve-out language in this engagement was the entire defense. Before signing a channel reseller agreement, a SaaS vendor should test the indemnity clause against a worst-case end-customer complaint: if a hypothetical complaint based purely on the reseller's pitch deck still triggers full indemnity, the clause needs to be tightened.
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