How To Write A Deposit Clause For Event Contracts

Taking an upfront payment can make a huge difference when you're running an event business. It helps you lock in the date, cover early costs, and avoid being left out of pocket if a client changes their mind close to the event.

But deposits can also be where refund arguments start, especially for weddings, parties and corporate events where emotions and budgets can run high. A clear deposit clause in your event contract helps everyone know where they stand from day one.

The key is to be clear about what the payment is for, when it becomes non-refundable, and what happens if the event is cancelled or postponed.

What Should A Deposit Clause In An Event Contract Say?

A deposit clause in your event planning agreement should say how much the client pays upfront, what that payment secures, whether it's refundable, and how cancellations or postponements are handled.

For an event supplier, your clause should usually cover:

• The amount: for example, 25% of the total fee or a fixed booking amount.
• The due date: for example, payable on signing the contract or within 3 business days of receiving the invoice.
• What the payment does: for example, it secures your services for a specific date and time.
• Whether it's refundable: and if so, in what situations.
• How it's credited: for example, it's deducted from the final invoice.
• What happens if the client cancels: including any cut-off dates and further amounts payable.
• What happens if the client postpones: including whether the payment transfers to a new date.
• What happens if you can't provide the service: including refunds, replacement services or other options.

A clause that simply says deposit non-refundable is usually too bare. You want the wording to explain the commercial reason for the deposit, such as reserving the date, turning away other bookings, ordering materials or starting planning work.

Say Aroha runs a wedding floristry business in Wellington. When a couple books her for a Saturday in peak wedding season, she may decline other enquiries for that date, order specific flowers, prepare design concepts and pay staff to help. Her deposit clause should reflect those real commitments, rather than just using a generic line copied from another supplier's terms.

Is A Non-Refundable Deposit Legal In New Zealand?

Yes, a non-refundable deposit can be legal in New Zealand, but it needs to be clear, fair and connected to genuine costs or business commitments.

New Zealand law doesn't ban non-refundable deposits for event suppliers. However, a deposit term can still cause problems if it's misleading, unfair, or out of proportion to what your business actually loses when the client cancels.

For example, keeping a modest booking deposit after you have held the date and turned away other work is usually easier to justify than keeping 100% of the event fee when the client cancels 9 months out and you can rebook the date.

The risk isn't just whether the word non-refundable appears in your contract. The bigger question is whether the clause is reasonable in context.

When you're deciding how to draft it, think about:

• whether the client saw and accepted the terms before paying;
• whether the amount reflects your likely loss, time or costs;
• how close to the event date the cancellation happens;
• whether you've already bought goods, booked subcontractors or started work;
• whether you can reasonably rebook the date; and
• whether your contract gives the client any fair options if something goes wrong.

If a client challenges the clause, a court or regulator may look past the label and consider the substance of the term. If the amount looks more like a punishment than a genuine protection for your business, it may be harder to rely on.

What Is The Difference Between A Deposit, Booking Fee And Prepayment?

The difference matters because each type of payment can create different refund expectations.

Many event suppliers use these words interchangeably, but your contract and business terms and conditions should be more precise. If your client pays money upfront, your terms should explain exactly what that payment is doing.

Deposit

A deposit is usually an upfront payment that confirms the booking and is credited towards the total price. In an event contract, it often protects you if the client cancels after you've reserved the date or started work.

If you want the deposit to be non-refundable, say so clearly and explain when it becomes non-refundable. For example, it might be non-refundable once you confirm the booking, or refundable in part if the client cancels early enough.

Booking Fee

A booking fee is often framed as a fee for reserving your availability. This can be useful if the main thing you're providing upfront is exclusivity for a date, rather than materials or labour.

If you call it a booking fee, make sure your contract explains whether it's separate from the service fee or credited against the final price. Clients can become frustrated if they thought the fee was part of the total amount, but you intended it to sit on top.

Prepayment

A prepayment is usually an amount paid in advance for services or goods that will be supplied later. If the service isn't supplied, the client may expect some or all of it back, depending on the contract and the reason the event didn't go ahead.

For example, if a corporate client prepays 50% for event photography, and then cancels 6 weeks out, your contract should say whether you keep all of that amount, keep only a cancellation fee, or apply a staged refund.

The practical point is simple: don't rely on the label alone. Spell out the consequences in plain English.

How Much Deposit Can You Ask For?

There's no fixed legal percentage for event deposits in New Zealand, so the right amount depends on your costs, risk and booking process.

Common deposit amounts for event suppliers are often in the range of 20% to 50%, but the right figure depends on how your business works. A photographer who mainly reserves time may use a different structure from a caterer who needs to order stock, roster staff and hire equipment.

When setting your deposit, consider:

• Your upfront work: consultations, planning, design work, mood boards, site visits or admin.
• Your unrecoverable costs: custom materials, special orders, subcontractor deposits or equipment hire.
• Your booking risk: whether the date is hard to replace if the client cancels.
• Your cash flow: whether you need staged payments to cover costs before the event.
• The client type: consumer weddings may need simpler, clearer terms than larger corporate events.

A helpful approach is to separate your payment schedule from your cancellation schedule. For example:

• 25% deposit on booking;
• 50% progress payment 30 days before the event; and
• final 25% due 7 days before the event.

Then your cancellation clause can explain what happens at each stage. This is often clearer than saying all payments are non-refundable, which can feel harsh and may not match your actual loss.

If you're GST registered, make sure your pricing and invoices are clear about whether amounts are inclusive or exclusive of GST. Your accountant can help with the tax treatment of deposits and timing of invoices.

What Should Happen If The Client Cancels Or Postpones?

Your contract should say, in advance, how much the client pays if they cancel or postpone and whether any payment can be transferred to a new date.

Event cancellations are rarely neat. A client might cancel because their guest numbers dropped, a wedding has been called off, a company has cut its budget, or bad weather has made the event unattractive but not impossible.

A good cancellation clause gives you a fair structure instead of leaving you to negotiate from scratch at a stressful time.

Client Cancellation

You can use a staged cancellation model based on how close the cancellation is to the event. For example:

• if the client cancels more than 90 days before the event, you keep the deposit only;
• if the client cancels 30 to 90 days before the event, they pay 50% of the total fee;
• if the client cancels less than 30 days before the event, they pay 100% of the total fee.

Those numbers are examples, not a rule. Your dates and amounts should match your business and the type of events you supply.

For a wedding supplier, the risk may be highest on popular Saturdays during summer because you may not be able to replace the booking. For a corporate AV supplier, the cost may depend more on staffing, freight, equipment allocation, supplier agreements and subcontractor bookings.

Postponement

Postponements need their own wording. If you only cover cancellation, you may end up arguing about whether a postponed event is a cancellation in disguise.

Your postponement clause can cover:

• how much notice the client must give;
• whether the deposit transfers to the new date;
• how long the client has to choose a new date;
• whether the new date depends on your availability;
• whether your prices can change for the new date; and
• what happens if the client postpones more than once.

For example, you might allow one postponement within 12 months, subject to your availability, with any extra costs or price increases payable by the client. If no new date is confirmed within that period, the booking may be treated as cancelled.

That kind of structure gives the client some flexibility while still protecting your calendar and cash flow.

What If You Cancel Or The Event Cannot Go Ahead?

If you cancel or the event can't legally or practically go ahead, the outcome depends on your contract and the reason the event is affected.

Your terms shouldn't only protect you when the client cancels. They should also explain what happens if you're unable to perform the service, or if an outside event disrupts the booking.

If You Cancel

If your business cancels without a valid reason, you generally shouldn't expect to keep a deposit for services you won't provide. Depending on the circumstances, you may need to refund amounts paid or offer an agreed alternative.

Your contract can give you options where something outside your control affects your ability to perform, such as serious illness, supplier failure, venue closure, extreme weather, natural disaster or a government restriction.

For example, a celebrant becomes seriously ill the day before a ceremony and has a clause allowing them to arrange a suitably qualified replacement where reasonably possible. If no replacement can be found, the contract explains what refund applies.

If The Event Becomes Impossible

For events affected by circumstances outside anyone's control, a force majeure clause can be very useful. It can set out whether the event is postponed, whether payments are credited to a new date, and how unrecoverable costs are handled.

Without a clear clause, you may need to look at general contract law, including the rules for frustrated contracts under the Contract and Commercial Law Act 2017. That can be harder to apply and may leave both sides unsure about refunds.

The better approach is to write a practical process into your event contract. If a venue becomes unavailable, a storm prevents outdoor setup, or a government direction stops the event from proceeding, your contract should give you a roadmap.

How Do The Fair Trading Act And Consumer Guarantees Act Affect Your Terms?

The Fair Trading Act 1986 and Consumer Guarantees Act 1993 can affect your deposit terms, especially when you supply services to individuals for personal events like weddings and parties.

Under the Fair Trading Act 1986, you must not mislead clients about your prices, refunds or cancellation rights. If your website says deposits are refundable but your invoice says they're non-refundable, that inconsistency can create problems.

The Fair Trading Act also includes unfair contract term rules for standard form consumer contracts and small trade contracts. Small trade contracts are generally business-to-business standard form contracts where the trading relationship is worth $250,000 or less per year, including GST, when the relationship first arises.

A term is more likely to be questioned if it creates a big imbalance, isn't reasonably necessary to protect your legitimate business interests, and would cause detriment if relied on. A blanket clause letting you keep every payment in every situation can be risky, particularly if it doesn't recognise timing, fault or genuine costs.

Under the Consumer Guarantees Act 1993, services supplied to consumers must be carried out with reasonable care and skill, be fit for any particular purpose the client told you about, and be completed within a reasonable time if no time is agreed.

You generally can't contract out of the Consumer Guarantees Act for consumer clients. If you're contracting with another business, you may be able to contract out in writing where it's fair and reasonable to do so.

For your event terms, this means:

• make your deposit and cancellation terms clear before payment;
• avoid saying something is non-refundable if there are situations where a refund may legally be required;
• keep records of the client's acceptance of your terms;
• make sure your website, quotes, invoices and contract say the same thing; and
• tailor your terms to how your business actually operates.

Templates often miss these details. Your documents work best when they reflect your real booking process, your costs and the kinds of events you supply.

Key Takeaways

• A deposit clause should clearly explain the amount, due date, purpose of the payment, refund position and cancellation consequences.
• Non-refundable deposits can be used in New Zealand, but they should be fair, clear and linked to genuine costs or business commitments.
• Deposits, booking fees and prepayments aren't the same thing, so your contract should define the payment you're asking for.
• Staged cancellation fees are often easier to justify than a blanket rule that all payments are always non-refundable.
• Your terms should cover postponements, supplier cancellation and events outside anyone's control, not just client cancellations.
• The Fair Trading Act 1986 and Consumer Guarantees Act 1993 can affect how your refund and cancellation terms work.

If you'd like help with your event service agreements, deposit and cancellation terms, booking processes or customer terms and conditions, you can reach us at 0800 002 184 or team@sprintlaw.co.nz for a free, no-obligations chat.