Can You Change Prices During A Supply Contract?

Can you change prices during a supply contract in New Zealand? Usually, yes, but only if your contract gives you that right, or the other party agrees to the change.

That can feel frustrating when your costs jump overnight. Freight, ingredients, labour, software subscriptions and exchange rates can all move quickly, while your contract price stays stuck where it was.

The good news is that price changes don't have to be awkward or risky if your terms are set up properly. A clear price variation clause can give you room to move, while still keeping the relationship fair and commercial.

If you're on the receiving end of a supplier's price increase, the same starting point applies: check what the contract actually says before you accept, push back or pass the cost on.

Can You Change Prices During A Contract In NZ?

Yes, you can change prices during a contract in NZ if the contract allows it, or if both parties agree to vary the contract.

If your supply contract says the price is fixed for 12 months, you generally can't simply send a new invoice at a higher rate halfway through and expect the customer to pay it. That would usually be a proposed change, not an automatic change.

If your contract includes a price adjustment clause, the answer will depend on how that clause is written. For example, your contract might let you increase prices:

• once per year on a renewal date
• after giving a set amount of notice, such as 30 days
• if your input costs increase by more than a stated percentage
• if a supplier, government charge, tax, duty or freight cost increases
• where exchange rate movements affect imported goods

If there's no clause, you can still ask the other party to agree to a price change. But you should get that agreement in writing before charging the new price.

That written agreement could be a signed deed of variation, an email confirmation, an updated order form or another written record that clearly shows what has changed and when the new price starts.

What If The Contract Does Not Mention Price Increases?

If the contract doesn't mention price increases, you usually need the other party's agreement before you can increase the price for existing orders or ongoing supply.

A contract variation works best when it's clear, specific and recorded in writing. You want to avoid a situation where you think the customer agreed to the new price, but the customer says they only agreed to keep talking.

A good written variation should cover:

• the old price and the new price
• the date the new price starts
• whether the change applies to existing orders, future orders or both
• whether any minimum spend, volume discount or delivery fee also changes
• who approved the change for each business

Sometimes, a customer may accept a price change by conduct, for example, by placing new orders after receiving updated prices. But relying on conduct can be risky, especially if the contract has a clause saying changes must be signed or agreed in a particular way.

If the contract has a formal variation clause, follow it. If it says variations must be signed by both parties, an informal phone call probably won't be enough.

What Should A Price Variation Clause Say?

A price variation clause should say when prices can change, how the new price is calculated, how much notice you'll give and what the customer can do if they don't accept it.

A vague clause like, we can change prices at any time, may look convenient. In practice, it can cause more trouble than it solves. Customers may challenge it, refuse to pay, or say they never agreed to such a broad right.

For many businesses, a more practical clause will cover the following points.

When You Can Increase Prices

Spell out the events that let you adjust pricing. These might include:

• increases in raw materials, ingredients or component costs
• changes in supplier prices
• freight, fuel or logistics cost increases
• changes in taxes, duties, levies or government charges
• exchange rate movements for imported goods or overseas software
• changes in scope, specifications, volumes or delivery requirements
• annual CPI style increases, if that suits your pricing model

The more specific you are, the easier it's to explain the increase commercially.

How The Increase Is Calculated

Your clause can use a formula, a cap, a cost pass through mechanism or a general right to revise a price list. The best option depends on your business.

For example, you might say that if a particular input cost increases, you can increase the contract price by the amount reasonably needed to reflect that increase. For longer contracts, you might prefer an annual review linked to a recognised index or a set percentage cap.

If you use a formula, make sure your team can actually apply it. A formula that nobody can understand won't help when you're trying to invoice quickly.

How Much Notice You Will Give

Most supply agreements should set a clear notice period for price increases. There's no single notice period that applies to every business contract in New Zealand, so you need to choose one that fits the deal.

Common notice periods are 14, 30 or 60 days. A longer notice period may be more appropriate if your customer needs time to update their own prices, budgets or customer communications.

Your clause should also say how notice must be given. For example, notice could be sent by email to the nominated contact person, or uploaded through an ordering portal if that's how your relationship works.

What Happens If The Customer Does Not Accept

This is where many clauses fall short. If the customer doesn't accept the increase, do they have to keep buying at the old price, can you stop supply, or can either party terminate future supply?

A balanced clause might give the customer a period to object or end future orders before the new price applies. That can make the clause easier to justify, especially in standard form contracts.

How Much Notice Do You Need To Give For A Price Increase?

You need to give the notice required by your contract. If the contract is silent, you should give reasonable notice and seek clear agreement before applying the increase.

What is reasonable will depend on the contract and the relationship. A one off order might need a different approach from a three year supply arrangement where the customer has built their pricing around yours.

As a practical guide, think about:

• how often prices usually change in your industry
• whether the customer has already placed orders at the old price
• whether the customer can cancel or reduce future orders
• how much the increase is
• whether the reason for the increase is outside your control
• whether your customer needs time to notify their own customers

Say you supply packaging to food businesses. Your overseas supplier increases cardboard prices by 18% and freight costs have also jumped. If your contract allows you to pass through supplier cost increases on 30 days' notice, you should send a clear notice explaining the new prices, the start date and the cost driver.

If your contract doesn't allow that, you can still explain the situation and ask the customer to agree. But you shouldn't assume silence means yes unless your contract clearly says that and the clause is fair and enforceable in the circumstances.

Can A Supplier Increase Prices Without Your Agreement?

A supplier can only increase prices without your fresh agreement if your contract gives them that right and they follow the required process.

If a supplier sends you a higher invoice out of nowhere, start by checking:

• the pricing clause
• any price review or indexation clause
• the notice clause
• the order form or statement of work
• any renewal clause
• the latest version of their standard terms

Look closely at whether the increase applies to current orders or only future orders. Many contracts allow suppliers to update future price lists, but not to reprice orders already accepted.

You can then respond in a practical way. For example, you might:

• ask the supplier to point to the clause that allows the increase
• ask when notice was given and when the new price starts
• ask for evidence of the cost increase if the clause requires it
• negotiate a stepped increase instead of an immediate jump
• reduce volumes, change specifications or move to a different product line
• confirm in writing what you have agreed

Be careful about continuing to order after receiving a price increase notice. Depending on the contract and the circumstances, the supplier may argue that your continued orders show acceptance of the new price.

What Laws Affect Price Increase Clauses In New Zealand?

New Zealand law doesn't ban price increase clauses, but laws like the Fair Trading Act 1986 and Consumer Guarantees Act 1993 can affect how you use them.

For business-to-business supply contracts, a contract review is usually the first place to start. But you still need to be careful about misleading conduct, unfair contract terms and consumer guarantees if your supply chain ends with consumers.

Fair Trading Act 1986

The Fair Trading Act 1986 prohibits misleading or deceptive conduct in trade. So, if you tell customers a price is fixed for a period, you shouldn't increase it during that period unless your contract clearly allows it.

The Act also has unfair contract term rules. These can apply to standard form consumer contracts and standard form small trade contracts. A small trade contract is generally a business-to-business contract that forms part of a trading relationship with an annual value of less than $250,000, including GST if applicable, when the relationship first arises.

A one sided supplier price increase clause may attract attention if it lets you change prices broadly, gives the customer no meaningful notice, and gives the customer no practical way to respond. The risk is higher if your customer had little ability to negotiate the terms.

The unfair contract term rules don't mean every price change clause is unfair. A transparent clause that explains when prices can change, gives notice and allows the customer to exit future supply is usually much easier to defend.

Consumer Guarantees Act 1993

If you supply goods or services to consumers, the Consumer Guarantees Act 1993 may also matter. For example, if no price has been agreed for services, the customer may only be required to pay a reasonable price.

For business-to-business transactions, parties can sometimes contract out of parts of the Consumer Guarantees Act, but this must be in writing and it must be fair and reasonable. You shouldn't rely on a generic template clause without checking whether it actually fits your business and your customer base.

Good Faith And Commercial Relationships

Most business supply contracts in New Zealand don't have a general good faith rule that overrides the written terms. Even so, how you communicate a price increase matters commercially.

If you give a clear reason, enough notice and a pathway for the customer to ask questions, you're more likely to preserve the relationship and get paid on time.

How Do You Tell Customers About A Price Increase?

You should tell customers about a price increase clearly, early and in the way your customer contract requires.

A price increase notice doesn't need to be dramatic. It should be direct, factual and easy to act on.

Your notice should include:

• the customer's name and contract or account reference
• the current price and the new price, or the updated price list
• the date the new price starts
• the contract clause you're relying on
• a short explanation of the reason for the increase
• whether existing orders are affected
• what the customer needs to do if they accept, object or want to discuss options
• the deadline for any response, if the contract sets one

For example, Aroha runs a Wellington coffee roastery and supplies beans to cafes on 12 month contracts. Her green bean costs have increased sharply because of exchange rates and freight. Her supply terms allow her to adjust prices for imported bean cost increases on 30 days' written notice.

Aroha sends each cafe a short email with the new price list, the start date, the clause reference and a simple explanation of the cost increase. She also offers to discuss alternative blends at different price points. That gives her customers time to plan, while protecting her margin.

Try not to bury price changes in a long newsletter or a general terms update. If the change affects what the customer pays, make it obvious.

How Can You Protect Your Business Before Costs Go Up?

You can protect your business by building price flexibility into your contracts through careful contract drafting before cost pressure hits.

This is much easier than trying to renegotiate when everyone is already under pressure. Your contract should match how your business actually prices work, products and risk.

Consider using:

• Price review dates: useful for ongoing supply arrangements and yearly agreements.
• Input cost clauses: helpful if your margins depend on materials, ingredients, fuel, freight or supplier pricing.
• Exchange rate clauses: useful if you import goods or pay overseas suppliers.
• Scope change clauses: useful for service businesses where extra work, urgent deadlines or changed specifications affect cost.
• Minimum order clauses: helpful if pricing depends on volume.
• Renewal pricing clauses: useful if you want updated rates to apply at the start of each new term.

You should also keep your sales process aligned with your contract. If your proposal says the price is fixed, but your terms say prices can change any time, that inconsistency can create problems.

Make sure your team knows:

• which document wins if the proposal and terms conflict
• when updated prices can be quoted
• who can approve discounts or price variations
• how to record a customer's acceptance
• when to pause and get advice before sending a price increase notice

Templates can be a useful starting point, but price variation clauses work best when they're tailored to your business model. A clause for a software subscription won't look the same as a clause for a food wholesaler, manufacturer, cleaning business or creative agency.

Key Takeaways

• You can usually change prices during a supply contract only if the contract allows it or the other party agrees.
• A good price variation clause should explain the trigger, calculation method, notice period and customer options.
• If you're responding to a supplier price increase, check the contract before accepting or paying the higher amount.
• The Fair Trading Act 1986 can affect broad or unclear price increase clauses, especially in standard form small trade contracts.
• Clear written notices help protect your margin while keeping customer relationships on track.
• Set up your pricing terms early, before cost increases put pressure on the deal.

If you'd like help with your supply contracts, price variation clauses, customer terms or supplier agreements, you can reach us at 0800 002 184 or team@sprintlaw.co.nz for a free, no-obligations chat.