If a reseller oversells a service, who is liable – the reseller or the source?

Reseller overselling is basically when a host allows a reseller to oversell their resources i.e selling more than the available resources. In this case I think the reseller is solely liable for overselling.

I think typically overselling is a bad thing.

Oversell means to sell beyond the means of delivery so it does not look good, but if you do it carefully based on your experience, make it meaningful with some statistical data then it can be done

Overselling is a normal business practice, used in many online and offline businesses. It is responsibility of the company offering the service to live up to its promises, nothing more.

I say that overselling is a smart business decision if you know what you are doing. I strongly disagree with over-population of servers/resources. You have to know when to stop, but none the less, you end up losing a lot of resources if you do not.