Federal Court rules 38 contract terms in 11 Fuji small business contracts unfair

The Federal Court has ruled that 38 terms contained in 11 small business contracts with Fujifilm Business Innovation Australia or Fujifilm Leasing Australia (together Fuji) are unfair.

The Australian Competition and Consumer Commission (ACCC) launched the action in the Federal Court in October 2020 against Fuji Xerox Australia Pty Ltd (now Fujifilm Business Innovation Australia) and Fuji Xerox Finance (now Fujifilm Leasing Australia) after a number of small businesses complained that the contract terms were causing significant financial harm.

Last week the Federal Court ruled the contract terms, which relate to the supply of printers and software for small businesses, “void and unenforceable”.

The ACCC said the unfair contract terms included terms providing for automatic renewal, excessive exit fees and unilateral price increases.

“We took this court action because Fuji’s unfair contract terms allowed this large company to leverage the significant power imbalance between it and small business customers to impose unnecessary and unjustifiable terms on these businesses,” ACCC Deputy Chair Mick Keogh said.

“Fuji’s unfair contract terms were imposed on many small businesses who had signed contracts containing these terms, and Fuji took action, including litigation, to enforce these terms.

“We continue to strongly advocate for law reform to prohibit unfair contract terms and enable the Court to impose penalties in cases where such terms are imposed and enforced against small businesses, as here, or consumers.”

The orders apply only to contracts entered into with small businesses, which are businesses employing fewer than 20 staff. 

A spokesperson for Fujifilm Business Innovation Australia said the orders made by the ACCC have been voluntarily consented to by Fujifilm Business Innovation Australia. The spokesperson also confirmed the company is no longer entering into contracts with small business customers based on any of the contracts identified by the Federal Court.

Fujifilm Business Innovation Australia also acknowledged “it had not met its own high standards in the instances identified by the Court”.

The spokesperson said Fujifilm Business Innovation Australia has also “introduced new contracts which are more balanced and beneficial for Fujifilm BI customers.”

“Existing small business customers on one of the contracts identified by the Court will soon be
contacted by Fujifilm BI and advised of the terms of their contract. Fujifilm BI hopes these orders will act as a catalyst for all traders in the print industry to review their standard form contracts and make any changes necessary to remove unfair contract terms,” the Fujifilm Business Innovation spokesperson said.

In its statement, the ACCC said since November 2016, Fuji has entered into or renewed approximately 34,000 contracts, the vast majority of which were made using the standard form contracts at issue in this case. Many of those contracts are still in force.  It is not known how many of these contracts were with small businesses, although it is likely this is a substantial number of these contracts. 

“Under the Court orders, Fuji is obliged to contact current customers with relevant contracts and ascertain if they are small businesses and make them aware of the orders. Fuji must also publish information about these orders on its website,” the ACCC statement said.

The statement further says that Fuji is ordered to implement a compliance program and pay part of the ACCC’s costs.

“Fuji admitted that these terms were unfair, and consented to the declarations and other orders made by the Court,” the ACCC said. 

More information about the types of small business contracts for printers or software which are covered by this order is available at the Federal Court website.

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