The Federal Court has declared that 38 contract terms used in contracts entered into by Fujifilm Business Innovation Australia (formerly Fuji Xerox) or Fujifilm Leasing Australia with many thousands of small businesses are unfair, following court action by the ACCC.
The unfair contracts appear to be targetted largely at Fuji-Xerox (now re-named) business equipment customers – it’s not clear at this stage whether photo retailers do business with Fujifilm Leasing. We have, um, how do you say, ‘reached out’ to Fujifilm via it’s PR consultancy, Campaignlab, for clarification.
‘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.’
The Court declared the unfair contract terms void and unenforceable. Fuji was also ordered to stop enforcing these terms in current small business contracts and to cease using these terms in 11 types of standard form contracts with small businesses for the next five years.
The orders apply to 11 types of standard form contracts Fuji entered with small businesses for printers and related software. The unfair contract terms included terms providing for automatic renewal, excessive exit fees and unilateral price increases.
‘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,’ Mr Keogh said.
The orders apply only to contracts entered into with small businesses, which are businesses employing fewer than 20 staff.
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.
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.
Fuji was also 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.
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.
The declared unfair contract terms
The types of terms which have been declared unfair and void include the following:
Automatic renewal terms: permit Fujifilm to renew the contract for a further period unless customers cancel the contract a certain number of days before the end of the contract term.
Disproportionate termination terms: allows Fujifilm to terminate the contract in a significantly wider range of circumstances than those which allow the customer to terminate the contract, if any.
Liability limitation terms: limit Fujifilm’s liability or require the customer to indemnify Fujifilm without corresponding rights for the customer.
Termination payment terms: require customers to pay extensive exit fees to Fujifilm in the event the contract is terminated, including certain charges which Fujifilm can set unilaterally.
Unfair payment terms: require customers to pay Fujifilm for software licensed pursuant to the agreement irrespective of whether Fujifilm has delivered the software and, when goods are purchased, to pay the purchase price prior to delivery.
Unilateral variation terms: permit Fujifilm to unilaterally vary some terms of the contract including the charges and terms contained in documents other than the signed contract.
Background
In October 2020, the ACCC instituted proceedings against Fuji Xerox Australia (now Fujifilm Business Innovation Australia) and Fuji Xerox Finance (now Fujifilm Leasing Australia) alleging that a number of Fuji’s standard form contracts contained unfair contract terms.
Fuji supplies a range of business products on a lease basis, including photocopiers, scanners and multifunction printers. Fuji also services these products, and supplies software and print management services. Its parent company is Fujifilm Holdings Corporation, based in Japan.
In some cases, Fuji enters into contracts with small businesses as ‘principal and/or agent’ on behalf of Fujifilm Leasing Australia, a related body corporate.
Fuji’s contract terms came to the ACCC’s attention via complaints from small businesses, including a complaint from the Australian Small Business and Family Enterprise Ombudsman, concerning standard form contracts used across the printing industry more generally.
Any supply contract that stipulates ‘minimum usage’ together with ‘penalty charges’ for not reaching or exceeding the minimum is unfair. Imagine, you buy a razor and the supplier makes you sign a contract: “You shall shave every day/365 days a year. You shall not grow a beard. You shall not wait 2 days to shave after a hangover. Blades are deemed to last 3 days, you shall renew the blade immediately after this period only with genuine Acme blades at a fixed price.” ‘Fuji’ is not alone in unfair printer/copier contracts – other suppliers work on similar principles while others are content with making ‘recurring revenues’ from ink, paper and renewable parts. Yes, Photo businesses do use high-end Fujifilm Business Innovation (the new name) printers. E.g. two of Australia’s largest school photo businesses I know have Fuji Xerox (old name) iGens – these babies can pump out over a million A4 equivalent impressions a month. If you are asked to sign a contract that appears unfair – say no and ask for the offending clauses to be redacted – or ‘no sale.’ There are always alternatives. Also, watch the finance T&Cs – you may find the real finance company is invisible behind the scenes and could take your house.
Thanks Andy – great insights and advice. Much appreciated.
No worries Keith, hope it helps. One other thing- if your printer/copier account manager rocks up in a Lamorghini, Ferrari or Bentley – be suspicious. Don’t laugh, there is a NZ Serious Fraud case on-going where this was the reality. Nothing wrong with driving flash cars but, how do humble sales reps get to afford one?