Guide
Terms of trade for NZ trade businesses
The clauses that actually get you paid, what each one is for, and where a template stops being good enough.
Terms of trade are the conditions sitting behind every job you quote. Most tradies operate without them for years and only discover the gap during their first serious dispute — usually over extra work nobody wrote down, or an invoice that has been "with the office" for two months.
They are not primarily a legal weapon. Their real value is that they settle the awkward questions — deposits, variations, late payment — in writing, before the job, when everyone is still friendly.
What to include
| Who you are | Legal entity name, trading name, GST number and contact details. If you trade through a company, the terms must be in the company’s name or you may be personally on the hook. |
| What the price covers | Whether the quote is fixed price or charge-up, what is excluded, and how long the quote stays open. Most NZ trade quotes are valid 14–30 days because material prices move. |
| Deposits and progress payments | When a deposit is payable, what it covers, and the progress-claim points on longer jobs. Anything over a few weeks should be billed in stages rather than all at the end. |
| Payment terms | The due date, accepted payment methods, and your bank account. Be specific: "7 days from invoice date" not "on completion". |
| Late payment | Interest rate on overdue amounts, recovery of collection and legal costs, and your right to suspend work while payment is outstanding. |
| Variations | That any change to scope is priced and confirmed in writing before it is carried out. This single clause prevents more disputes than the rest combined. |
| Materials and ownership | That materials remain your property until paid for in full. Worth having drafted properly if it matters to you — retention of title is easy to write and easy to get wrong. |
| Access and site conditions | What you need from the customer — access, power, water, a clear work area — and what happens to the price if it is not there when you arrive. |
| Defects and warranty | What you warrant, for how long, and the process for raising a defect. Note that consumer work carries Consumer Guarantees Act rights you cannot contract out of. |
| Cancellation | What happens if the customer cancels after materials are ordered or work has started. |
| Disputes | How a disagreement gets handled before it becomes a claim. For construction work, the Construction Contracts Act adjudication regime may apply regardless of what your terms say. |
The variations clause matters most
If you only tighten one thing, make it variations. The pattern is always the same: the customer asks for something extra while you are on site, you say yes because it is five minutes of work, five minutes becomes half a day, and it appears on the final invoice as a number they never agreed to.
A clause requiring written confirmation before extra work proceeds gives you something to point at — and, more usefully, gives you a natural reason to send a quick text confirming the price at the moment it is asked for. That text is the evidence, and it is far easier to send than an argument is to win later.
Getting them accepted
- Attach them to the quote, not the invoice. Terms that first appear after the work is finished are of very little use.
- Get the quote accepted in writing. An emailed "yes, go ahead" or an accept button on a quote does the job. Verbal acceptance is worth something but proves nothing.
- Reference them on every document. A single line — "This quote is subject to our terms of trade" — with the terms attached or linked.
- Keep the accepted version. If you update your terms, the version that applies is the one accepted at the time, so keep copies rather than overwriting.
Where a template is not enough
A checklist like this is a good starting point, and for a straightforward residential trade business a reviewed template will usually do. Three situations justify getting terms drafted properly:
- Retention of title and security interests. If you genuinely want to claim materials back, the clause has to work alongside the Personal Property Securities Act — and usually needs registration to bite. Copied wording routinely fails here.
- Construction contract work. The Construction Contracts Act 2002 governs payment claims, payment schedules and retentions for construction work, and overrides terms that conflict with it. Subcontracting to main contractors puts you squarely in its scope.
- Consumer work. The Consumer Guarantees Act and Fair Trading Act give consumers rights you cannot contract out of. Terms that appear to exclude them can themselves be a Fair Trading Act problem.
This is general information, not legal advice.
Terms of trade are a contract. This page describes what NZ trade businesses commonly include and why, but it is not a document you can copy and rely on. A lawyer reviewing a draft for your specific trade is a few hundred dollars and is the cheapest part of any dispute you avoid.
Related
- NZ quote template — where your terms should be attached
- NZ invoice template
- Tax invoice requirements
Common questions
- What are terms of trade?
- The standing conditions you do business under — when payment is due, what happens if it is late, who owns materials until they are paid for, how variations are agreed, and how disputes get handled. They sit behind every quote and invoice you issue.
- Do terms of trade need to be signed?
- They need to be accepted, which is not quite the same thing. The safest approach is to attach them to the quote and have the customer accept the quote in writing, so acceptance of the quote is acceptance of the terms. Terms first shown on the invoice, after the work is done, are much harder to enforce.
- What payment terms are normal for NZ tradies?
- Seven days from invoice date is the most common for residential work. Commercial and main-contractor work usually runs on 20th of the following month, or whatever the head contract dictates. State an actual due date on the invoice rather than a number of days.
- Can I charge interest on late payments?
- Only if your terms say so and the customer accepted them before the work. A common approach is a stated percentage per month on overdue amounts, plus recovery of reasonable collection costs. It is more useful as leverage in a conversation than as income.
- Should I ask for a deposit?
- For any job where you are buying materials up front, yes. A deposit covering materials means you are never funding someone else’s project out of your own account. It is normal practice in the trades and rarely questioned when it is in the quote from the start.
- Do I need a lawyer to write terms of trade?
- For a straightforward one-person trade business, a good template reviewed once by a lawyer is usually enough and costs a few hundred dollars. If you want retention of title or a security interest to be genuinely enforceable, get them drafted properly — those clauses fail when they are copied carelessly.