Deposit Clauses for Custom Orders in New Zealand

A custom order can leave your business out of pocket if a customer cancels after you have bought materials, booked labour or started production. The risk is even sharper when the item is personalised, made to measure or too specific to resell at full value.

Common mistakes include calling every deposit non-refundable, failing to say when production starts, and treating a change-of-mind cancellation the same as a faulty goods refund. Those gaps can create disputes, chargebacks, poor reviews and issues under New Zealand consumer law.

A well-written deposit clause helps customers know what they are committing to and helps your business recover genuine costs when an order is cancelled. The right approach depends on the value of the order, how bespoke the product is, what you have already spent, and whether the customer is a consumer or another business.

Custom Order Deposit Checklist for NZ Businesses

A deposit clause should match the real commercial risk of the order, not just use a blanket phrase like all deposits are non-refundable. For custom goods, the strongest terms are clear, fair and connected to actual costs your business may incur.

Use this checklist when setting up business terms and conditions for custom orders involving products such as personalised clothing, bespoke furniture, signage, custom jewellery, made-to-measure blinds, promotional products, printed merchandise, fabricated parts or tailored gift boxes.

• Describe the custom work: Specify whether the goods are personalised, made to order, altered to the customer's measurements, branded with their logo or produced in a special colour, size or material.
• State the deposit amount: Say whether the deposit is a fixed dollar amount, a percentage of the total price, or an amount calculated after design approval.
• Explain what the deposit covers: Link the deposit to design time, administration, sourcing materials, supplier deposits, production scheduling, labour and loss of resale value.
• Set the cancellation point: Make it clear when a customer can cancel for a full or partial refund, and when your business may retain some or all of the deposit.
• Identify approval milestones: Use written approvals for quotes, proofs, measurements, mock-ups, colours, samples and final designs.
• Separate customer change of mind from legal rights: Your terms should not suggest the customer loses rights under the Consumer Guarantees Act 1993 or Fair Trading Act 1986.
• Explain delays and non-payment: State what happens if the customer does not provide information, approve designs or pay the balance by the due date.
• Keep records: Save quotes, messages, proof approvals, supplier invoices, timesheets, production notes and cancellation communications.

The main commercial question is whether the deposit is a genuine pre-payment towards the order or a cancellation fee in disguise. If it operates as a cancellation fee, it should be reasonable and proportionate to the loss your business is likely to suffer.

For example, a furniture maker may ask for a 50% deposit before ordering custom timber and allocating workshop time. That may be easier to justify than a 90% non-refundable deposit taken before any design details are confirmed. A print shop producing 200 branded uniforms may be able to retain costs once garments have been ordered and embroidered, but should be careful about keeping money for work it has not done and costs it has not incurred.

Your terms should also fit the sales channel. An online checkout needs clear tick-box acceptance before payment. A showroom order should have written terms on the quote, invoice or order form. A business-to-business order may also need purchase order wording and credit terms for invoice customers, especially where the customer wants the deposit paid by invoice.

When Can You Keep a Deposit for Made-to-Order Goods?

You can usually keep a custom order deposit when your contract clearly allows it and the amount retained reflects a genuine business loss, committed cost or lost opportunity caused by the customer's cancellation. The more bespoke the goods and the further production has progressed, the stronger your position will usually be.

New Zealand law does not make every deposit automatically refundable or automatically non-refundable. The starting point is the agreement between the business and the customer, read alongside consumer protection rules and general contract principles. A clear deposit clause matters because it tells the customer what will happen before they commit.

In practice, deposits are most defensible where they cover costs such as:

• consultation, design or quoting time that is part of the paid order process
• materials ordered specifically for that customer
• supplier deposits your business cannot recover
• labour already completed
• machine setup, pattern cutting, proofing, embroidery, engraving or tooling
• production slots you cannot fill at short notice
• discounted resale value of partially completed or personalised goods

The timing of cancellation is critical. A customer who cancels one hour after placing an order, before you have reviewed the file or bought materials, is different from a customer who cancels after approving a final proof and after production has started.

Example: Full Deposit Retained After Production Starts

A small signage business takes a 40% deposit for a custom shopfront sign. The customer approves the artwork, the business orders acrylic sheets, pays for specialty paint and schedules installation staff. Two days later, the customer cancels because they are changing their brand.

If the terms clearly say the deposit may be retained once artwork is approved and materials are ordered, the business has a strong commercial basis to keep the deposit. The deposit is connected to identifiable costs and the sign is unlikely to be useful for another customer.

Example: Partial Refund Before Any Costs Are Incurred

A clothing business takes a deposit for custom bridesmaid dresses. The customer cancels the next morning, before measurements have been finalised and before any fabric has been ordered. The business has spent 30 minutes on administration but has not started production.

A clause saying the entire deposit is non-refundable in every circumstance may be harder to justify. A better outcome may be to retain a reasonable administration fee and refund the balance, if that matches the terms and the actual position.

Example: Deposit Applied to Changes Instead of Cancellation

A customer orders a custom dining table and later asks to change the size after timber has been cut. Your terms can say that changes after approval may incur extra costs, and that the original deposit will not cover rework caused by new instructions.

This is often more effective than treating every change as a cancellation. A clear change process can preserve the sale while protecting your margin.

If your business regularly handles high-value custom orders, consider using staged payments instead of a single deposit. For example, you might charge a deposit on order, a progress payment on design approval and the balance before delivery or installation. Staged payments make the financial consequences clearer and reduce the amount in dispute if the order stops part-way through.

Consumer Law Limits on Non-Refundable Deposits

A non-refundable deposit in NZ must still comply with consumer law, especially where the buyer is purchasing for personal, domestic or household use. You cannot use a deposit clause to take away statutory guarantees or mislead customers about their refund rights.

The Consumer Guarantees Act 1993 gives consumers guarantees that goods will be of acceptable quality, fit for their known purpose, match their description or sample, and be supplied with reasonable care where services are involved. Custom-made goods are not outside these protections just because they are bespoke.

If a custom product has a serious problem, a consumer may have rights to reject the goods and obtain a refund, replacement or other remedy. For example, if a made-to-measure wardrobe is the wrong dimensions because of your error, or custom uniforms do not match the approved design, a term saying no refunds on custom orders will not prevent the consumer from relying on the Consumer Guarantees Act.

The Fair Trading Act 1986 is also relevant. It prohibits misleading and deceptive conduct and false or misleading representations. If your checkout or invoice says non-refundable deposit without explaining the limits, customers may think they have no rights at all, even where your business has failed to supply what was promised. That can create compliance risk as well as reputational risk.

A safer way to frame a made-to-order refund policy is to distinguish between:

• customer change of mind: the customer cancels, changes plans, finds a cheaper option or no longer wants the goods
• customer-caused issues: the customer gave incorrect measurements, approved a spelling error, supplied low-quality artwork or delayed required information
• business fault: the goods are defective, do not match the agreed specification, are not fit for a disclosed purpose, or are supplied in breach of consumer guarantees
• external delays: supplier shortages, courier delays, import delays or events outside either party's control

Your deposit clause should never say that the customer has no rights if your business gets the order wrong. A better clause says the deposit is not refundable for change-of-mind cancellations after a certain point, while confirming that nothing in the terms limits rights that cannot be excluded under New Zealand law.

For business customers, the position can be different. The Consumer Guarantees Act allows businesses to contract out in some business-to-business transactions if the exclusion is in writing, the parties are in trade, and it is fair and reasonable. That does not mean a business seller should copy consumer wording into trade terms. If you sell to both consumers and businesses, your terms should be carefully structured so the right wording applies to the right customer type.

Unfair contract term rules under the Fair Trading Act can also apply to standard form consumer contracts and standard form trade contracts, including specified trade contracts. A term that lets a business keep a large deposit in every situation, even where the business has done little work or can easily resell the goods, may attract scrutiny. The risk increases where customers have no real ability to negotiate the terms.

Penalty principles may also be relevant if a deposit operates like a punishment for cancellation rather than protection of a legitimate business interest. The safest approach is to make the amount retained proportionate to your likely loss and to keep evidence showing how the deposit was calculated.

How to Word Custom Order Terms and Conditions

Strong custom order terms explain the customer's commitment in plain language before payment is made. The goal is to reduce surprises, not bury the customer in legal wording after a dispute starts.

Your deposit clause should sit inside broader customer contracts covering quotes, specifications, approvals, production, delivery, changes and refunds. A single sentence on an invoice is often too thin for bespoke work, especially for online orders or high-value manufacturing.

A practical structure is:

1. Quote and order confirmation: State that the order is not confirmed until the customer accepts the quote and pays the deposit.
2. Custom specifications: Record the exact product details, including dimensions, colours, materials, text, artwork, logos, sizes, quantities and intended use.
3. Deposit amount and due date: Say how much is payable, when it is due and whether it is credited towards the final price.
4. Production start point: Identify the moment after which materials may be ordered or production may begin, such as written approval of a proof or receipt of measurements.
5. Cancellation rules: Explain refund outcomes before and after production milestones.
6. Changes and rework: State that changes after approval may lead to extra charges and extended timeframes.
7. Balance payment: Say when the remaining amount is due, such as before dispatch, delivery, installation or collection.
8. Consumer law statement: Confirm that the terms do not limit non-excludable rights under New Zealand law.

Here is sample wording a business might adapt for a made-to-order refund policy:

Because your order is made or customised specifically for you, we may purchase materials, schedule labour and begin production after your order is confirmed. Your deposit is credited towards the total price. If you cancel before we have ordered materials or started work, we may retain a reasonable administration fee and refund the balance. If you cancel after we have ordered materials, approved artwork, cut materials, personalised goods or started production, we may retain some or all of your deposit to cover costs, work performed and loss of resale value. This does not limit any rights you may have under New Zealand consumer law if the goods are faulty, do not match the agreed specifications or otherwise fail to meet a consumer guarantee.

For higher-value orders, you may want more detailed milestone wording:

Once you approve the final design, measurements, proof or specification, we may begin production and the order cannot be cancelled without our agreement. If we agree to cancellation after this point, you must pay for materials ordered, third-party charges, work completed and any other reasonable costs we have incurred. We may deduct those amounts from your deposit and will refund any remaining balance.

Avoid wording that overreaches. Phrases such as all deposits are non-refundable under all circumstances, no refunds ever or the customer waives all rights can create problems, especially when selling to consumers. They may also increase the chance of payment disputes because customers feel trapped rather than informed.

Deposits should also be visible at the right time. For online orders, place key deposit and cancellation wording near the product page, checkout, quote acceptance or payment button. For email orders, include the terms with the quote and require written acceptance. For showroom sales, give the customer a copy before taking payment and make sure staff use consistent explanations.

Your staff scripts matter. If the written terms say cancellation after design approval may lead to retained costs, but a salesperson says you can cancel any time, the customer may rely on what they were told. Train staff to explain when the order becomes committed and to record approvals in writing.

Record-keeping is especially useful when a customer challenges a deposit through their bank, payment provider or public review. Keep evidence of the customer's acceptance of the terms, the approved design, the timestamp of production steps, the costs incurred and any options you offered, such as a partial refund or store credit.

If your business sells through a marketplace or social media, check whether platform rules affect deposits and refunds. Platform policies can be stricter than your own terms, and payment processors may ask for proof that the customer accepted the relevant conditions before paying.

FAQs

Can I Say a Custom Order Deposit Is Non-Refundable?

Yes, but the wording should be limited and accurate. A non-refundable deposit is more defensible where the customer cancels for change of mind after you have incurred costs, started work or committed to bespoke materials. It should not suggest the customer loses rights if the goods are faulty or not as agreed.

Do Customers Have Refund Rights for Made-to-Order Goods?

Yes. Made-to-order goods can still be covered by the Consumer Guarantees Act 1993. A customer may have remedies if the goods are defective, do not match the agreed description, are not fit for a disclosed purpose or are supplied without reasonable care. Customisation mainly affects change-of-mind cancellations, not statutory guarantees.

How Much Deposit Should I Take for Custom Goods?

The right amount depends on your upfront costs, labour, production risk and whether the goods can be resold. Many businesses choose a percentage that reflects materials and initial work, then use staged payments for larger orders. A very high non-refundable deposit is harder to justify if little work has been done.

What If the Customer Gave the Wrong Measurements or Artwork?

Your terms should make the customer responsible for checking measurements, spelling, logos, colours and proofs before approval. If you produced the goods according to approved information, you may be able to charge for rework or retain the deposit, provided your terms were clear and you did not contribute to the error.

Should My Online Store Have Separate Custom Order Terms?

Yes, if custom orders carry different cancellation risks from standard stock. Your website terms should explain deposits, production milestones, proof approvals, change requests, balance payments and refund rights in a way customers see before paying.

Key Takeaways

• A deposit for a custom order should be linked to genuine costs, labour, materials or loss of resale value, not used as an automatic penalty.
• New Zealand consumer law still applies to bespoke goods, including the Consumer Guarantees Act 1993 and Fair Trading Act 1986.
• A made-to-order refund policy should clearly separate change-of-mind cancellations from faults, incorrect specifications and other legal rights.
• Milestones such as quote acceptance, proof approval, material ordering and production start dates make deposit clauses easier to enforce and explain.
• Clear records of approvals, costs and customer communications can make a major difference if a deposit is disputed.

If your business takes deposits for bespoke goods, Sprintlaw New Zealand can help with your custom order terms, website terms, refund wording and business-to-business supply terms. Reach out on 0800 002 184 or team@sprintlaw.co.nz for a free, no-obligations chat.