Corporate giant Fuji has been taken to task by the ACCC for allegedly including unfair contract terms in its contracts with small business owners.
The ACCC is now pursuing legal action against the company which supplies a range of business products on a lease basis, including photocopiers, scanners and multifunction printers to small business owners.
Currently, Australian Consumer Law contains protections for small businesses from unfair terms in business-to-business standard form contracts. and Fuji has been called out for providing contacts that allowed for unilateral changes that disadvantaged business owners.
Understanding unfair contract terms
To be unfair a contract term must:
- cause a significant imbalance in the parties’ rights and obligations
- not be reasonably necessary to protect the legitimate interests of the party advantaged by the term
- cause financial or other detriment to a small business if it were relied on.
A standard form contract is one that has been prepared by one party to the contract and where the other party has little or no opportunity to negotiate the terms — that is, it is offered on a ‘take it or leave it’ basis.
Only a court (not the ACCC) can decide whether a term is unfair.
Why the ACCC has taken action
The ACCC instituted proceedings against Fuji alleging that nine types of Fuji’s standard form small business contracts contain numerous unfair contract terms, including automatic renewal terms, excessive exit fees and unilateral price increases.
ACCC Deputy Chair Mick Keogh, who has particular responsibility for small business, explains the ACC had received numerous complaints from small businesses regarding Fuji’s contract.
“Some of the unilateral variation terms allow Fuji to modify contracts by creating new rights and obligations, including increasing prices, without notifying its customers and without giving them any corresponding right to negotiate or reject,” Keogh said.
“The ACCC will argue that the unfair terms in these contracts cause a significant imbalance in the rights and obligations of Fuji and the small businesses they contract with.
“This court action by the ACCC should prompt all other traders in the printing support industry to review their standard form contracts and make any necessary changes to remove unfair contract terms.” he concluded.
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