Taken to court: ACCC commences proceedings against Fuji Xerox for alleged breaches of the Australian Consumer Law

In the last quarter of 2020, the ACCC commenced proceedings against Fuji Xerox Australia Pty Ltd and a related entity (together "Fuji") for the alleged use of unfair contract terms in their standard form contracts since October 2018.

 

Fuji Xerox terms under the scope

The ACCC has alleged that 31 different unfair contract terms have been found 173 times across nine of Fuji's standard form contracts entered into by Fuji with its small business customers.

Some of the key terms identified by the ACCC which are alleged to be unfair include:

  1. unilateral variation terms allowing Fuji to vary key terms such as price without notice or consent from the other party.
  2. automatic renewal terms such that the contract will automatically renew without notice to the other contracting party unless the other contracting party provides Fuji with notice to cancel the contract within a specific time period.
  3. exit fee terms that allow Fuji to enforce an exit fee for the termination of the contract that the amount to be unilaterally determined by Fuji potentially resulting in payments disproportionate to the amount of loss suffered by Fuji.
  4. termination terms providing Fuji with the right to suspend or terminate the contract for minor breaches without extending the same right to the other contracting party.
  5. terms creating payment obligations on the other contracting party regardless of whether the relevant goods or services were provided by Fuji.
  6. unreciprocated rights and obligations terms establishing rights for Fuji and obligations for the other contracting party that were not reciprocated so to apply to both.
The ACCC also alleges that the contracts significantly limit Fuji's liability such that the other contracting party must indemnify Fuji even when Fuji has caused or contributed to the loss or damage suffered, and the contracts also create obligations on the other contracting party arising from other contracts that Fuji was not required to provide.

Desired outcomes

The ACCC is seeking a range of remedies in the proceedings including:
  1. declarations that the identified terms are unfair and consequently, void;
  2. injunctions preventing Fuji from relying on the unfair terms in its current contracts and from entering into further contracts that contain those terms;
  3. an order for a corrective notice;
  4. an order that the company establish a compliance programme; and
  5. costs.

Reform is underway

Last year, it was announced that the Federal, State and Territory governments have agreed to reforms to the unfair contracts regime to enhance the regime's current protections.

You can read further about the proposed reforms in our article here.

Amongst other important changes, once enacted, the Courts will have the power to order that an unfair contract term is unlawful and enforce civil penalties against the contravening party.

Key takeaways

The proceedings against Fuji act as an important reminder to companies to review their standard form contracts to ensure that the contracts do not contain any unfair terms.

If you are concerned about any clauses in your own standard form contract, we urge you to seek advice to make the necessary changes to your contracts to avoid being pursued by the ACCC. McCabe Curwood can advise you as to how best to protect your business' interests in a fair and lawful way.

If you suspect you are a party to an unfair contract, we also urge you to seek advice to protect your interests and negotiate to have the term voided so to not cause you significant financial harm.

McCabe Curwood's Litigation and Dispute Resolution group has extensive experience in competition and consumer law, including advising clients in relation to unfair contract terms and their rights and obligations pursuant to Australia's unfair contracts regime. If you believe you have entered into a contract containing an unfair contract term, we urge you to contact us today.

Contributors

Stephanie Andrews Lawyer