Ever wondered why it seems impossible to escape from high-priced photocopier contracts?
Read on.
On Friday the Federal Court of Australia ruled that nearly 300 clauses in Fuji Xerox contracts entered into since November 2016 were illegal because they are unfair and ordered the company never to attempt to enforce them.
The affected contracts – which number 34,000 – include those for photocopiers, printers, office automation, and software as well as finance contracts entered into by customers with Fuji Xerox Finance.
The particular clauses that have been the source of frustration to businesses across the nation for decades include those that create exit obstacles like the need for a termination payment or the giving of notice prior to the end of a term to avoid an automatic renewal.
Among the 10 categories of offensive arrangements conceded by Fuji Xerox to be unlawful are those in “extraneous documents” that have no real purpose other than to deter the customer sourcing similar equipment or services from a competitor by requiring payment of a penalty or the observance of some extraneous and onerous condition.
Since July 2010 unfair terms in consumer contracts – i.e. those for the supply of goods or services having a value of $40,000 or less; or which were acquired for personal domestic or household use – have been illegal and unenforceable.
But from November 2016, the unfair terms law was extended to where a small business – ie one with less than 20 full-time and part-time employees – either supplies or acquires goods or services costing up to $300k, or up to $1 million if the supply extends beyond 12 months.
The Australian Competition and Consumer Commission filed the case against Fuji Xerox in October 2020 in the Federal Court in Sydney.
In March 2021 Fuji Xerox’s application to dismiss the case – on grounds it had “no reasonable prospect” of succeeding – was rejected by Justice Angus Stewart.
Perhaps seeing the writing (printed) on the wall – and to shelter itself from the ultimate fallout from what is a scandal of momentous proportions – Fuji Xerox Australia changed its name in April 2021 to Fujifilm Australia.
The ACCC case concerned a sample of 18 Fuji Xerox photocopier contracts with mum and dad operations including a travel agency, a vet, professionals, printing businesses and a building supplies business. A Brisbane sporting club also featured.
In July 2022 Fuji agreed to orders sought by the ACCC, admitting every allegation of illegality levelled against it.
The court declared the unfair terms to be void and injuncted the company against enforcing them in small business contracts that it entered into or renewed since November 2016.
It is also obliged to notify all affected customers directly and by website advertisements and to enter into a comprehensive compliance program.
The ACCC alleged many of the outrageous provisions were deliberately inserted into the contracts to ensnare customers and that Fuji “adopted a particular drafting technique in a conscious attempt to address the inherent and obvious unfairness”.
Fuji denied such motivation but offered no explanation of how or why its legal arrangements with customers became so iniquitous.
The decision has implications far beyond Fuji Xerox customers. Businesses wanting advice on their past or current office equipment, internet telephony, office automation and photocopier contracts from any supplier i.e. not just Fuji Xerox, should email us with details of your concern.
ACCC v Fujifilm Business Innovation Australia Pty Ltd [2022] FCA 928 12 August 2022, Stewart J
