Custom Order Cancellations in New Zealand

A customer pays a deposit for a custom cake, handmade dress, engraved product, fitted cabinet, commissioned artwork or made-to-measure item. You buy materials, block out production time and start the job. Then the customer changes their mind and asks for their money back.

The costly mistakes are usually the same: calling every deposit non-refundable without explaining why, starting work before the customer has accepted clear terms, or refusing a refund even where the product is faulty or the business has not delivered what was promised. Those mistakes can create problems under the Consumer Guarantees Act 1993 and the Fair Trading Act 1986.

A New Zealand business can often protect itself when a customer cancels a custom order, but the answer depends on what your terms say, what stage the job has reached, and whether the goods or services meet consumer guarantees. A well drafted custom order cancellation policy in your customer contracts can make the difference between a fair outcome and a messy dispute.

Custom Order Cancellation Checklist

A custom order is safest when the price, scope, deposit, cancellation point and refund rules are clear before the customer pays.

For makers, retailers and creative businesses, the legal issue is rarely whether the work is creative or difficult. The issue is whether the customer agreed to fair terms, whether your business acted consistently with those terms, and whether the goods or services were supplied to the required standard.

Use these checks before accepting a deposit for a bespoke job:

• Describe the custom item or service clearly. Record sizes, colours, materials, finishes, wording, artwork, dates, inclusions and exclusions.
• State the deposit amount and what it covers. For example, design time, materials ordered, supplier booking fees or production slots held.
• Explain when the order becomes binding. This might be when the customer approves the quote, pays the deposit, signs an order form or approves a proof.
• Set cancellation stages. A cancellation before materials are ordered may be treated differently from a cancellation after production starts.
• Separate change-of-mind cancellations from business fault. A customer changing their mind is different from your business delivering late, supplying defective goods or failing to match the approved brief.
• Keep evidence of acceptance. Keep the signed quote, email approval, checkout confirmation, proof approval, invoice and payment record.
• Use plain language. A cancellation clause should be easy for a customer to understand, not hidden in dense fine print.

Custom work also needs a practical internal process. If a customer calls to cancel, staff should know what to check before promising a refund or refusing one. Check the order date, deposit paid, whether materials have been purchased, whether design work has been done, whether production has started and whether the customer has raised any concern about quality or delivery.

For online stores, put the key cancellation terms in your online goods and services terms where the customer will see them before paying. For in-person orders, include them on the quote or order form, not only on a receipt handed over after payment. For Instagram, Facebook or email sales, send the terms with the quote and ask the customer to confirm acceptance before the deposit is paid.

When You Can Keep a Deposit

You can usually keep a customer deposit if the customer agreed to that term and the amount retained is a fair reflection of your loss or committed costs.

A deposit is not magic wording. Calling a payment a non-refundable deposit in NZ does not automatically let a business keep it in every situation. The safer approach is to explain what the deposit is for and when it will not be refunded.

For example, a furniture maker may take a 40% deposit to cover timber ordered specifically for a custom dining table and to secure workshop time. If the customer cancels after the timber is cut, the business may have a strong basis to keep some or all of the deposit, especially if the timber cannot be reused without loss.

On the other hand, if a customer cancels minutes after paying and the business has not incurred any cost or turned away other work, keeping a very large deposit may be harder to justify. The issue becomes even sharper where the term was buried, vague or surprising.

A fair deposit clause in your business terms and conditions will usually cover these points:

• The deposit secures the booking or production slot. This matters for businesses with limited capacity, such as wedding vendors, designers and makers.
• The deposit may cover immediate costs. This can include custom materials, third-party supplier costs, pattern making, design work or admin time.
• The retained amount may increase as the job progresses. For example, a partial refund may be available before materials are ordered, but not after production starts.
• The business may deduct reasonable costs from any refund. This gives more flexibility than a blanket refusal.
• The customer remains responsible for approved variations. If they approve extra work and then cancel, the additional work should be dealt with clearly.

New Zealand contract law generally allows parties to agree on cancellation consequences. However, a cancellation fee or deposit retention can be challenged if it is out of proportion to the business's legitimate interests. Consumer-facing businesses also need to consider the Fair Trading Act 1986, especially rules against misleading or deceptive conduct and unfair contract terms in standard form consumer contracts.

A term is more defensible when it is transparent, proportionate and linked to real consequences for your business. A term is more vulnerable when it reads like a penalty, gives the business complete discretion, or lets the business keep everything even if it has not suffered any loss.

Good records are essential. If a dispute arises, it helps to show:

• the customer's signed or written acceptance of the terms
• purchase orders or receipts for custom materials
• time spent on design, consultation or production
• photos of work in progress
• supplier cancellation charges
• evidence that the production slot could not be resold

Those records do not need to be complicated. A job file, email thread and simple production notes can be enough to show why keeping a deposit was reasonable.

Refund Rights for Bespoke Goods

Custom-made goods are not exempt from consumer guarantees, but a customer does not usually get a refund just because they changed their mind.

The Consumer Guarantees Act 1993 applies to many sales of goods and services to consumers in New Zealand, including bespoke goods and custom-made work. A business cannot avoid those guarantees by writing that there are no refunds, no returns or no warranties.

For goods, the guarantees can include that products are of acceptable quality, fit for a particular purpose made known to the business, match their description or sample, and comply with any express guarantees. For services, the guarantees can include reasonable care and skill, fitness for a particular purpose made known to the supplier, and completion within a reasonable time where no time is agreed.

This means the legal answer changes depending on why the customer is cancelling or asking for a refund.

Change of Mind

A customer generally has no automatic right under the Consumer Guarantees Act to cancel a custom order simply because they no longer want it, chose the wrong colour, found a cheaper option, or their event plans changed.

Your cancellation policy can set out whether any refund is available for change-of-mind cancellations. For example, you might allow a cooling-off period before work starts, a partial refund before materials are ordered, or no refund once a proof has been approved and production has begun.

Faulty or Non-Compliant Goods

A customer may have refund, repair, replacement or cancellation rights if the custom item is faulty, unsafe, not as described, not fit for the purpose they told you about, or materially different from what was approved.

For example, a customer orders a custom sign for outdoor use and tells the business it must withstand weather. If the sign fades or warps almost immediately because the wrong material was used, the business cannot rely on a non-refundable deposit clause to avoid consumer guarantees.

Where a problem can be fixed and is not serious, the business may have the opportunity to repair or remedy it within a reasonable time. Where the failure is serious, the customer may be entitled to reject the goods, cancel the service or seek a refund or compensation. The right response depends on the nature of the failure and the circumstances.

Customer-Provided Measurements, Artwork or Information

A business is in a stronger position where the issue comes from information the customer provided and approved, as long as the business did not contribute to the mistake.

For example, if a customer provides the wrong spelling for engraving and approves the final proof, your terms can say the customer is responsible for that approved error. If the business types the wording incorrectly after approval, that is different.

Measurement issues need careful handling. If a customer self-measures for a custom garment, blind, cabinet or product, your order process should explain the risk and require confirmation. If your business takes the measurements or gives expert advice, you may be responsible if those measurements are wrong or the advice is not given with reasonable care and skill.

Delays and Missed Deadlines

A customer may have stronger rights if delivery by a particular date was a key part of the deal and your business misses it.

Event-based custom work is a common problem. A wedding cake, branded merchandise for a launch, uniforms for an opening day or signage for a trade show may be useless if supplied late. If the date was agreed or clearly communicated as essential, a cancellation clause should not pretend the customer has no rights if the business fails to deliver on time.

Protect your business by confirming realistic timelines, what you need from the customer, and what happens if the customer delays approval, measurements, content or final payment.

Drafting a Fair Cancellation Policy

A good cancellation policy gives your business cost protection while still preserving the customer's statutory rights.

Many disputes start because the policy is too simple. A line like all deposits are non-refundable may feel clear, but it often fails to deal with the situations that matter. What if the customer cancels before any work starts? What if you cannot source the agreed material? What if the item is faulty? What if the customer changes the design halfway through?

A stronger custom order cancellation policy is practical and staged. It should match how your business actually works.

Core Clauses to Include

Your terms should usually cover:

• Order acceptance. State when the order becomes binding, such as deposit payment and written approval of the quote.
• Scope and specifications. Attach or list the agreed custom details, including drawings, proofs, measurements or design files where relevant.
• Deposit and payment schedule. Explain when payments are due and whether work will pause if payment is late.
• Cancellation by the customer. Set out what is refunded or retained at each stage of the job.
• Changes and variations. Explain how extra costs and timing changes will be approved.
• Proofs and approvals. State that production may begin after approval and that approved details are the customer's responsibility, subject to your legal obligations.
• Materials and third-party costs. Explain that special-order materials and supplier costs may not be refundable once committed.
• Delivery, collection and storage. Cover collection deadlines, delivery costs and what happens if the customer does not collect finished goods.
• Consumer guarantees. Make clear that the policy does not limit rights under the Consumer Guarantees Act 1993.

That last point matters. A policy that appears to remove consumer guarantee rights can create Fair Trading Act risk. Phrases like no refunds in any circumstances or you waive all rights are risky for consumer sales. Plain, balanced wording is safer.

Examples of Staged Cancellation Terms

The right stages will depend on your industry, but these examples show how the structure can work.

For a custom product business:

• Cancellation before materials are ordered: deposit refunded less reasonable admin or design costs already incurred.
• Cancellation after materials are ordered: refund reduced by non-recoverable material and supplier costs.
• Cancellation after production starts: deposit not refunded, and additional work completed may be payable.
• Cancellation after completion: balance remains payable before delivery or collection.

For a creative service business:

• Cancellation before the briefing session: deposit refunded less any booking fee stated in the quote.
• Cancellation after concept work begins: deposit applied to work completed to date.
• Cancellation after approval of final artwork or files: amounts for completed stages remain payable.
• Cancellation caused by the business's failure to supply the agreed service: customer remedies preserved under the Consumer Guarantees Act.

For event-based bespoke goods:

• Cancellation outside a stated period before the event: partial refund may be available.
• Cancellation close to the event: deposit may be retained because ingredients, staff and production time have been committed.
• Customer delays in approving final details: delivery date may shift and extra costs may apply.
• Business delay that makes the goods unusable for the event: customer rights are not excluded.

These examples work best when the retained amount is tied to actual costs, lost production capacity or work performed. If you use percentages, make sure they are commercially sensible for your cost structure.

Fair Trading Act Risks

The Fair Trading Act 1986 requires businesses to avoid misleading or deceptive conduct, false representations and unfair practices. It also regulates unfair contract terms in standard form consumer contracts and small trade contracts.

For custom order cancellations, risk often appears in three places.

First, the sales conversation may promise more flexibility than the written terms. If staff say we can sort a refund if plans change, but the terms say no refund after payment, the customer may argue they were misled.

Second, the website or checkout may hide key conditions. If the customer only sees the non-refundable deposit wording after payment, the term may be harder to rely on.

Third, a standard term may be too one-sided. A term that lets the business cancel whenever it wants and keep the customer's money, while giving the customer no equivalent protection if the business fails to perform, may create risk.

Train staff to use the same language as your terms. Make the policy visible before payment. Review standard terms regularly, and consider a legal health check if you sell to consumers or small businesses on a take-it-or-leave-it basis.

Handling a Cancellation Request in Practice

The best response to a cancelled custom order is calm, documented and tied to the agreed terms and the work already done.

When a customer asks to cancel, avoid an instant yes or no unless the situation is obvious. A rushed refusal can escalate the dispute. A rushed full refund can leave your business carrying costs you were entitled to recover.

A practical process looks like this:

1. Confirm the request in writing. Ask the customer to confirm they want to cancel and the reason for cancellation.
2. Check the agreed documents. Review the quote, order form, online terms, proof approvals, invoices and messages.
3. Identify the job stage. Note whether design, materials, supplier orders, production, delivery booking or completion has occurred.
4. Separate change of mind from quality concerns. If the customer alleges a defect or missed promise, assess that before relying on the cancellation clause.
5. Calculate any refund or amount owing. Tie deductions to costs, work performed or the policy stages.
6. Explain the outcome clearly. Send a short written explanation with the relevant clause and supporting facts.
7. Keep the file. Save correspondence, receipts, photos and notes in case of a chargeback, complaint or later dispute.

Your written response should be polite and specific. For example:

Thanks for letting us know. Your order was accepted on 4 May when the deposit was paid and the final design proof was approved. Since then, we have ordered the custom fabric and completed the cutting stage. Under the cancellation terms accepted with your quote, the deposit is applied to non-recoverable materials and work completed once production has started. We will not require the remaining balance, but the deposit is not refundable. This does not affect any rights you may have if the goods are not supplied in accordance with the Consumer Guarantees Act.

That style of response is much safer than deposits are never refundable. It shows the decision was based on the actual job, not a blanket refusal.

If the customer raises a genuine quality issue, change the process. Ask for photos, inspect the item if possible, compare it against the approved brief, and decide whether repair, replacement, refund or another remedy is appropriate. Do not frame a consumer guarantee issue as a mere cancellation.

For businesses selling through platforms or taking card payments online, chargebacks are a practical risk. Payment providers may ask for evidence that the customer accepted the terms and that the goods or services were supplied as agreed. Keep proof approvals, delivery evidence and cancellation correspondence in a form you can access quickly.

Customer communication can also protect your brand. Many custom order disputes happen around stressful events, tight budgets or misunderstood expectations. A partial credit, revised production plan or transfer to another product may sometimes be a better commercial outcome than insisting on every contractual right. The key is to make any goodwill offer clear, limited and recorded in writing.

FAQs

Can a New Zealand Business Keep a Non-Refundable Deposit?

Yes, in many cases, but not automatically. The customer should have agreed to the term before paying, and the amount kept should be linked to reasonable costs, work done, supplier commitments or lost capacity. A blanket non-refundable deposit can be risky if it is hidden, excessive or used to avoid consumer guarantee rights.

Do Bespoke Goods Have Refund Rights?

Yes. Bespoke goods refund rights still exist where the custom item is faulty, not as described, unfit for a disclosed purpose, or not supplied with reasonable care and skill. Custom-made does not remove the Consumer Guarantees Act 1993. Change of mind is different and can be managed through your cancellation policy.

Can I Say There Are No Refunds on Custom Orders?

You can say that change-of-mind refunds are not available after a certain stage, but avoid saying there are no refunds in any circumstances. That wording can mislead customers because statutory remedies may still apply if your business fails to meet consumer guarantees.

What If the Customer Approved the Design and Then Complains?

If the final product matches the approved design, measurements, spelling or specifications, your business is usually in a stronger position. Keep the approval record. However, you may still be responsible for defects, poor workmanship or expert advice your business gave incorrectly.

Should My Cancellation Policy Be in My Quote or Website Terms?

Ideally, both. The customer should see the key cancellation terms before paying the deposit. For higher-value or detailed custom jobs, include the policy in the quote or order form and require written acceptance.

Key Takeaways

• A customer who cancels a custom order because they changed their mind does not usually have an automatic refund right under the Consumer Guarantees Act 1993.
• A non-refundable deposit in NZ is more defensible when the customer accepted clear terms and the retained amount reflects real costs, work performed or lost production capacity.
• Consumer guarantees custom made goods still apply, so your policy cannot remove rights for faulty goods, misleading descriptions, poor workmanship or missed essential deadlines.
• The Fair Trading Act 1986 can be relevant if refund wording is misleading, hidden or too one-sided in standard form terms.
• A staged custom order cancellation policy is usually better than a blanket no refunds statement.
• Good records, including quote acceptance, proof approvals, material costs and work-in-progress evidence, make cancellation decisions easier to defend.

If your business takes deposits for custom products or creative work, Sprintlaw can help with practical order terms, deposit and cancellation clauses, proof approval wording and consumer law compliance. Contact us on 0800 002 184 or team@sprintlaw.co.nz for a free, no-obligations chat.