The recent case of ACCC v Fujifilm Business Innovation Australia Pty Ltd [2022] FCA 928 considered whether terms under Fujifilm’s standard small business software/services and rental/lease contracts were unfair under the ACL.
The Court found that 38 contract terms were unfair, declaring them void and unenforceable. The orders applied to the following types of standard term contracts that between Fujifilm and small businesses:
- Automatic renewal terms under which neither party had given notice to end the contract within the specified period prior to term expiry, resulting in holding over periods terminable on 90 days’ notice.
- Disproportionate termination terms which included those that allowed Fujifilm to terminate for any breach by the customer, where the customer does not have a reciprocal termination right.
- Termination payment terms – terms that required the customer to pay an early termination payout determined by Fujifilm, which was based on arrears, the future rental charges for the balance of the term and break costs.
- Liability Limitation Laws which included those that allowed Fujifilm to limit its losses to those permitted under the ACL.
- Non-reciprocal obligation terms, which included assignment provisions that prohibit the customer from assigning its rights without Fujifilm’s consent but allowed Fujifilm to assign its rights without the customers consent.
- End of contract period terms, which pertained to terms applying to finance leases, where title to the equipment did not transfer to the customer after paying the residual value for the equipment following the term expiry
- Unilateral variation terms which allowed Fujifilm to vary service and other charges unilaterally, eve if notice was given to the customer.
- Extraneous documents terms such as those under which the customer was required to comply with other documents not set out in the contract and which can be amended without notice to the customer.
- Irrevocable offer terms, including those that bind the customer to an irrevocable offer for an indefinite time, in circumstances where Fujifilm are under no corresponding obligation to accept the offer within a particular time.
- Unfair payment terms which would allow Fujifilm to invoice the customer for software licence fees irrespective of delivery by Fujifilm.
Furthermore, Fuji was ordered to publish a corrective notice on its websites, send communications to each customer and implement a compliance program. In the wake of this case businesses should be conscious of the risk of contracting through standard form contracts.