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Case note: unfair small business contract terms


In Australian Competition and Consumer Commission v Fujifilm Business Innovation Australia Pty Ltd [2022] FCA 928 the Federal Court of Australia declared that nearly 300 individual contract terms in Fuji’s printer and photocopier rental agreements and Software Licence and Support Services Agreements were  void and unenforceable in respect of its small business customers.

The trial judge declared that a term was an unfair term for one or more of the following reasons:

“(1) It allows Fuji to unilaterally vary either the price charged to the customers and/or the rights and obligations between Fuji and the customer.

(2) It provides for automatic renewal of the contract unless the customer gives notice to cancel the contract in circumstances where there is no obligation on Fuji to notify the customer that the renewal will occur.

(3) It incorporates additional contractual terms by reference to one or more extraneous documents, which documents are difficult for the customer to locate or identify, and which Fuji can unilaterally vary with no obligation to give notice of the variation.

(4) It limits Fuji’s liability for any delay in supplying or delivering equipment to the customer in circumstances where the customer has no right to be excused from charges payable for the period of the delay.

(5) It provides that the customer must pay Fuji all costs and expenses Fuji incurs in exercising its rights under the contract on a full indemnity basis, in circumstances where there is no corresponding right on the part of the customer and where there is no requirement on Fuji to minimise its costs.

(6) The customer warrants by the term that it has read each document forming part of the contract, including extraneous documents that Fuji may not have provided, and that it enters into the contract solely on the contents of the contract, thereby purporting to exclude any liability on the part of Fuji for pre-contractual representations.

(7) It provides a significant cap, reduction or limitation on Fuji’s total liability to the customer and excludes a claim for consequential loss in circumstances where the customer’s liability has no limit.

(8) It requires the customer to indemnify Fuji for loss or damage to the products, including all associated costs, with exclusions only for limited wear and tear and anything directly attributable to Fuji’s negligence, thereby requiring the customer to indemnify Fuji for damage caused by third parties, or accidentally or indirectly by Fuji.

(9) It entitles Fuji to suspend the provision of services where the customer breaches any term while still requiring the customer to pay for services that are suspended.

(10) It entitles Fuji to terminate the contract immediately on notice and for cause if the customer breaches any term with no corresponding right of the customer and no right for the customer to remedy the breach.

(11) It provides for payments to Fuji upon Fuji exercising a right to terminate, including payments for the remaining term of the contract in circumstances where the customer receives nothing in return and forfeits any prepayments.

(12) It provides that, at the end of the minimum contract term, the customer must either:

(a) stay in possession of the equipment and pay Fuji the residual value, without receiving title to the equipment; or
(b) pay Fuji the shortfall between the residual value and market value as determined by Fuji.

(13) It provides that, by signing and returning the contract to Fuji, the customer makes an irrevocable offer to acquire the goods and services but that Fuji is not bound until the customer has been advised that the contract has been accepted or until Fuji commences providing services – leaving the customer bound yet without the required goods or services for an indefinite period.

(14) It provides that Fuji can invoice the customer regardless of whether the goods and services the subject of the contract have been provided.”

Fuji was ordered to publish a corrective notice on its websites, send communications to each customer and implement a compliance program.

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David Jacobson

Author: David Jacobson
Principal, Bright Corporate Law
Email: djacobson@brightlaw.com.au
About David Jacobson
The information contained in this article is not legal advice. It is not to be relied upon as a full statement of the law. You should seek professional advice for your specific needs and circumstances before acting or relying on any of the content.

The post Case note: unfair small business contract terms appeared first on Bright Law.


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