How To Draft A Referral Agreement In New Zealand

Referrals can be one of the fastest ways to grow a small business in New Zealand. When someone you trust (or someone who already has your ideal customers) sends work your way, it can shorten your sales cycle and build instant credibility.

But the legal side matters, too. If you’re paying commissions, sharing customer information, or letting someone represent your brand, it’s usually worth having a clear referral agreement in place from day one.

In this guide, we’ll walk you through how to draft a referral agreement for your NZ business, what to include, common traps to avoid, and when it’s smart to get a lawyer involved.

What Is A Referral Agreement (And When Do You Need One)?

A referral agreement is a contract between your business and another person or business (the “referrer”) where they agree to introduce potential customers or leads to you, usually in exchange for a referral fee or commission.

In plain terms: you’re putting in writing who refers, what counts as a referral, how they get paid, and what happens if something goes wrong.

Referral Agreement vs Sales Agent Agreement

This is a common point of confusion for small business owners.

• Referral: the referrer introduces a lead, and you handle the sales process. They typically don’t negotiate terms or “close” the deal.
• Sales agent: the agent may actively promote, negotiate, or enter into contracts on your behalf (or otherwise play a more direct role).

If you accidentally give someone authority to negotiate or make promises to customers, you can create risk (including under consumer and fair trading laws). If what you really need is an agency arrangement, you may be better suited to a more comprehensive Sales Agency Agreement rather than a basic referral agreement.

When A Referral Agreement Is Usually Worth It

Even if your referrer is a trusted business contact, it’s still a good idea to document expectations. A referral agreement is especially useful when:

• you’re offering a referral commission (ongoing or one-off);
• you’re sharing customer or lead information (privacy and confidentiality issues);
• the referrals are a key part of your growth strategy (so disputes could be costly);
• you’re dealing with multiple referrers and want consistent terms; or
• your services involve regulated industries, health information, or high-value contracts.

If you’re scaling and bringing different partners into your business ecosystem, it can also help to tighten up your broader business legals (for example, having solid customer-facing Business Terms so you’re not relying on “handshake” understandings).

How To Structure A Referral Agreement (Step-By-Step)

A good referral agreement doesn’t need to be complicated, but it does need to be clear. Here’s a practical structure you can use as a drafting checklist.

1) Identify The Parties And The “Referral Program”

Start with the basics:

• legal names of both parties (individual or company);
• NZBN/company number (if applicable);
• business addresses and contact details; and
• a short statement describing the arrangement (the referrer introduces leads; you provide the goods/services).

If you have a group structure or multiple trading entities, make sure the correct entity is signing. Getting this wrong can make enforcement messy later (especially if the other party argues they contracted with a different business).

2) Define Key Terms (This Is Where Disputes Usually Start)

Most referral disputes come down to one thing: the parties had different assumptions about what “counts”. That’s why clear definitions matter.

Common definitions to include:

• Referral (what must happen for a lead to qualify?)
• Qualified Lead (does the lead need to meet criteria like location, budget, decision-maker status?)
• Introduced Customer (is it enough that they’re introduced, or do they have to purchase?)
• Referral Fee or Commission (how it’s calculated and when it’s earned)
• Net Revenue (if commission is revenue-based, what costs/taxes/discounts are excluded?)

This is also the place to be specific about timeframes, like a “cookie period” or attribution period (for example, the customer must sign within 60 days of introduction for the referral to qualify).

3) Set Out The Referral Process

Spell out the actual mechanics. It sounds simple, but it prevents real-world friction.

• How does the referrer submit a referral (email, form, CRM entry)?
• What information must be included?
• Do you have the right to accept or reject a referral?
• Who “owns” the relationship with the customer once referred?

Also think about conduct: can the referrer contact the lead repeatedly, or does your business take over communication immediately after an introduction?

4) Document The Referral Fee (And The Exact Trigger For Payment)

This is the heart of the deal. Your referral agreement should answer, in a way that can’t be misunderstood:

• How much is payable (fixed fee, percentage, tiered rates)?
• When it’s payable (on signing, on invoice, when you receive payment, after a cooling-off period)?
• What happens if the customer cancels, seeks a refund, or doesn’t pay?
• Whether fees are recurring (e.g. monthly commission for 12 months) or one-off only.

If you’re paying a percentage, be careful with how you define the base amount. “10% of the contract value” sounds clear until you add discounts, change orders, refunds, credit notes, or staged payments.

It can also be worth stating (as applicable) whether GST is included or added, and what needs to happen before payment is made (for example, if the referrer is GST-registered and must issue a valid tax invoice). If you’re unsure, get accounting or legal advice for your specific setup.

5) Include A Practical Reporting And Audit Clause

Referrers often want visibility, and business owners want control. A balanced clause might cover:

• how you’ll confirm whether a referral converted;
• how often you’ll provide statements (monthly/quarterly); and
• limited audit rights (so the referrer can verify commission, without disrupting your operations or giving access to unrelated or sensitive information).

This can avoid “he said/she said” arguments later, particularly where multiple referrers may claim the same customer.

Key Clauses Every NZ Referral Agreement Should Include

A referral agreement isn’t just about payment. It’s also about managing legal risk while your business grows.

Here are the clauses we typically recommend considering.

Confidentiality

Your referrer may learn sensitive information about your pricing, customers, strategy, and systems. A confidentiality clause can help protect your business if the relationship ends or turns sour.

Depending on your situation, a standalone Non-Disclosure Agreement can also be useful (particularly if you’re discussing partnerships or sharing commercially sensitive information before the referral relationship is finalised).

Privacy And Customer Information (Privacy Act 2020)

If referrals involve sharing personal information (like names, phone numbers, emails, or even more sensitive information), you need to think about your privacy obligations under the Privacy Act 2020.

Practically, your referral agreement should address:

• whether (and on what basis) the referrer is permitted to disclose the lead’s information to you;
• how the parties will handle consent or other lawful authority to share and use the information (which may vary depending on the context);
• what you can do with the data once received; and
• how both parties will store and protect personal information.

It’s also a good time to check that your Privacy Policy properly covers how you collect leads and market to them (especially if the referrer is sending you customer details directly).

No Authority To Bind (Avoid Accidental Promises)

This clause is simple but important: it clarifies the referrer can’t enter into contracts for you or make promises on your behalf.

Why does this matter? Because if the referrer tells a lead “you’ll definitely get a refund” or “your delivery will be next week”, you could end up dealing with a complaint or a dispute (and sometimes a misleading conduct issue under the Fair Trading Act 1986).

A well-drafted “no authority” clause helps draw a line between a referral and an agency relationship.

Non-Solicitation (Protect Your Team And Your Customers)

Non-solicitation clauses can help stop a referrer from:

• poaching your staff or contractors; or
• trying to take your customers directly after they’ve been introduced to you.

These clauses need to be reasonable and tailored, but they’re often worth including if the referrer is close to your customer base (for example, a complementary service provider operating in the same market).

Exclusivity (Or Non-Exclusivity)

Be upfront about exclusivity.

• Exclusive: you agree to only accept referrals from that referrer in a category or region (or you agree not to work with competing referrers).
• Non-exclusive: you’re free to engage other referrers and market your services however you want.

Many small businesses prefer non-exclusive arrangements for flexibility. If a referrer is pushing for exclusivity, think about performance requirements (for example, minimum referral numbers) so you’re not locked in with no results.

Term, Renewal, And Termination

Your referral agreement should clearly state:

• the start date and end date (or whether it’s ongoing);
• whether it auto-renews; and
• how either party can terminate (notice period, termination for breach, immediate termination for serious misconduct).

You should also include what happens after termination, including:

• whether the referrer is still entitled to commission on pre-termination referrals; and
• how long “tail period” payments last (if you agree to them).

Dispute Resolution

Even with a good working relationship, misunderstandings can happen. A dispute resolution clause can require both parties to try to resolve issues in good faith before escalating.

It might include steps like negotiation between the parties, mediation, and then (if needed) court proceedings.

Common Mistakes To Avoid When Drafting A Referral Agreement

Referral arrangements often start informally. That’s normal. But if you’re paying money, relying on someone to represent your business, or sharing lead information, it’s not something you want to “wing”.

Here are common mistakes we see in practice.

Being Vague About When Commission Is Earned

If your agreement says “commission is payable if the lead becomes a client” you still haven’t answered:

• Does the customer need to sign a contract?
• Do they need to pay the first invoice?
• What if they cancel within a short period?

Clarity here prevents disputes and keeps your cashflow predictable.

Not Thinking About The Customer Journey

Imagine this: a customer is referred today, but they don’t buy until 9 months later. The referrer then claims they should still get paid, because they “brought the customer in”.

This is why referral attribution periods (and clear “tail” rules) matter. Without them, you can end up paying commissions long after the referrer stopped contributing value.

Accidentally Creating An Employment Relationship

Most referrers are independent businesses or contractors, not employees. But the overall reality of the relationship matters, and if you manage an individual like staff (for example, tightly controlling how they work, requiring exclusivity, or supervising them day-to-day), that can create risk and confusion about status.

If you’re engaging an individual to do ongoing work, you may need a proper contractor arrangement rather than a referral agreement. Sometimes the best starting point is a tailored Contractor Agreement, depending on what you actually want them to do.

Forgetting About Marketing Compliance

Referrers often promote your business. That means you should think about:

• what they can say about your services (and what they can’t);
• how they can use your logos and branding; and
• how they handle reviews, testimonials, or pricing claims.

Misleading claims can create legal risk under the Fair Trading Act 1986. A simple clause requiring the referrer to follow your written marketing guidelines can make a big difference.

Using A Template That Doesn’t Match Your Business Model

A “standard” referral agreement rarely fits perfectly. A referral agreement for a software subscription business looks very different to a referral agreement for building services or a professional practice.

Templates can also miss key issues like privacy, attribution periods, or refund/cancellation treatment.

It’s usually much cheaper to get the agreement right upfront than to deal with a commission dispute later.

What Other Legal Documents Should You Have Alongside A Referral Agreement?

A referral agreement is part of your legal foundations, but it shouldn’t be the only document doing the heavy lifting.

Depending on how your business operates, you might also want:

• Customer contract / terms so you control what you’re promising to the end customer (this is often separate from the referral deal).
• Privacy documentation, especially if you’re collecting and storing leads or marketing to them (your Privacy Policy is a good starting point).
• Confidentiality documents (a Non-Disclosure Agreement can help where you’re sharing sensitive information during discussions).
• Company governance documents if you’re growing and bringing in partners or investors (for example, a Shareholders Agreement can help avoid internal disputes as you scale).

And if your referrers are also providing services (not just introductions), you may need a separate service arrangement to cover deliverables, liability, and payment terms.

Key Takeaways

• A referral agreement sets clear rules for how referrals work, how commission is calculated, and when payment is triggered, which helps you avoid disputes and protect cashflow.
• Your referral agreement should clearly define what counts as a “referral”, what qualifies as a “converted customer”, and the timeframe for attribution.
• Include protective clauses like confidentiality, privacy compliance (Privacy Act 2020), no authority to bind, termination, and dispute resolution to manage legal risk from day one.
• Be careful not to accidentally create an agency or employment-style arrangement if you only intend a simple referral relationship.
• A referral agreement works best alongside other legal foundations like customer terms, privacy documentation, and (where relevant) contractor arrangements.

If you’d like help drafting a referral agreement that fits how your business actually gets leads (and protects you as you grow), you can reach us at 0800 002 184 or team@sprintlaw.co.nz for a free, no-obligations chat.