Lawsuit alleges Oracle oversold and under-delivered on NetSuite software

Lawsuit alleges Oracle oversold and under-delivered on NetSuite software

The claim states that Oracle conducted "unfair business practices" while failing to "provide all the functionality at the price promised".

Published on 23rd June 2023

A court claim has alleged Oracle conducted a “widespread fraudulent scheme and unfair business practice” in sales of its Netsuite software while failing to “provide all the functionality at the price promised.”

The wide-reaching allegations center on sales of NetSuite SuiteSuccess Cloud, a SaaS solution targeted as SMEs, and form the basis of a claim for fraud, misrepresentation, and breach of contract.

The Register has offered Oracle the opportunity to respond to the claims made in the case brought before the District Court, Northern California.

River Supply, Inc (RSI), a Pennsylvania-based architectural construction material supplier, claims that “Oracle lures their customers into signing complex and confusing agreements, several of which agreements are not adequately disclosed, and which the customer does not even know exist and therefore cannot be binding,” according to the amended complaint [PDF], filed on Monday. An example given in the complaint of efforts by Oracle, which bought Netsuite for $9.3 billion in 2016, to obscure contractual arrangements is its use of the Subscription Services Agreement, which the plaintiff alleged was difficult to find in “a complex set of contract documents” presented to customers via DocuSign.

The complaint alleges:

Many customers, including RSI, are completely unaware of Oracle's Subscription Services Agreement ('SSA'), which is contained in a disguised hyperlink, on the Estimate Form. This agreement is not sent as an executable PDF, but rather is cleverly packaged and disguised so as to be completely missed by the typical Oracle small or medium sized business customer when executing the Estimate Form via a DocuSign link.

Even customers aware of the link would find it takes them to another complex set of links, River Supply claimed, and alleged Oracle does not require customers to view this information in order to sign the agreement, despite it containing information it deemed essential to the binding contract between the software supplier and user.

“In short, RSI had no fair notice of the SSA, and therefore never assented to be bound by those terms, and there was no meeting of the minds, so as to bind RSI to the terms of the SSA,” the court documents allege.

“The only conclusion that can fairly be drawn from such a provision is that Oracle is trying to make it difficult to understand what actually constitutes the applicable professional service terms.”

Once work began on the project – in this case to replace financial, commerce and payroll software – RSI claimed to have found it was a different story to the one portrayed when it had talked to the sales team.

The court documents allege Oracle breached its agreement with the user by “failing to implement a workable ERP solution and failing to perform the services in a professional manner consistent with industry standards, and as was represented by Oracle.”

The breach-of-contract claim adds: “From the beginning Oracle’s professional services team appeared anything but professional. Instead, they were unprepared and over their heads and did not to have a thorough understanding of their own technology. Oracle also failed to field a stable team to manage the project, and the team was plagued by high turnover among the Oracle professional staff.”

The construction material supplier goes on to cite an example, alleging in the complaint that in June 2021, a key member of the Oracle team left NetSuite just as RSI learned that the customization he had prepared would not work.

RSI is asking the court for Oracle to return the money it paid to the software giant, as well as compensation for costs it had incurred internally in attempting to implement the software.

The complaint also claims that Oracle’s alleged “unfair business practice of promising customers an ERP solution that does not exist, and then bidding the project low and then trying to inflate the contract price through change orders has been practiced on many Oracle/NetSuite customers.”

The plaintiff cites a case involving Tayo Daramola, a former employee of the ERP giant, who alleged he was forced out of Oracle after he observed that the company had sold his customers software products it could not deliver, and that were not functional. At the time, Oracle disputed Daramola’s claim. “We don’t agree with the allegations and intend to vigorously defend the matter,” a company spokesperson said in a statement to The Register.

The case is still going through the US courts, where Daramola is appealing a district court’s dismissal of his whistleblower retaliation action.


The latest updates straight to your inbox

We just need a few details to get you subscribed

Health Checks

Inventory & Compliance

Cloud Readiness & Optimisation

Agreement & Audit Support


Looking for something specific?

Let's see what we can find - just type in what you're after

Wait! Before you go

Have you signed up to our newsletter yet?

It’s chock full of useful advice, exclusive events and interesting articles. Don’t miss out!

Cookie Notice

Our website uses cookies to ensure you have the best experience while you're here.