>>>But if I specify ON UPDATE NO ACTION what good is this constraint? I don't see a problem of the multiple cascade paths here. What am I missing? How do you get around this issue with SQL Server?
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>>Does vendor or products table already have another constraint with CASCADE enabled?
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>Yes. But to completely different tables. That is Vendors has a constraint to some table, say VendorCategories and the Products has constraint with Cascade to a table ProductCategories. Why should those other be relevant?

I think SQL Server is getting confused with so many cascade relations and can not handle them.