Owed Money With No Contract: What NZ Businesses Can Do

You’ve done the work, delivered the goods, or completed the project - and now the client isn’t paying. Then you realise the worst part: there’s no signed agreement, no neatly drafted contract, and the “deal” was mostly a few calls, texts, and a handshake.

If you’re a small business owner in New Zealand, it’s not unusual to be owed money with no contract in place. The good news is you’re not automatically out of options. In many cases, you can still enforce payment - but you’ll need to be smart about how you approach it, what evidence you gather, and what steps you take next.

Note: This article is general information only and not legal advice. If you’re dealing with a high-value debt, a complex dispute, or you’re unsure about your rights, it’s worth getting advice on your specific situation.

Below, we’ll walk you through what NZ businesses can do when money is owed but it’s not in writing, how to strengthen your position, and how to set yourself up better for next time.

Does A Contract Have To Be In Writing In New Zealand?

No - a contract doesn’t always need to be written to be enforceable in New Zealand.

In plain terms, a contract is an agreement that the law will enforce. Many business owners assume “no signature = no contract”, but that’s not quite right. A lot of business deals are made through everyday conduct: an email exchange, a quote that’s accepted, goods that are ordered and delivered, or services that are requested and performed.

Generally, a contract can be formed verbally, in writing, or even through conduct (what the parties do). For example, if a customer asks you to do a job, you do it, and they accept the benefit - that can strongly suggest there was an agreement.

To keep it simple, courts and tribunals often look for the building blocks of a contract, including:

• Offer: one party offers to supply goods/services on certain terms
• Acceptance: the other party accepts that offer (by saying yes, confirming by email, or acting on it)
• Consideration: something is exchanged (usually money for goods/services)
• Intention to create legal relations: in business dealings, this is usually assumed
• Certainty: the key terms are clear enough (what was being supplied, roughly when, and for what price)

If you want the deeper legal breakdown, it’s worth knowing what makes a contract legally binding, because those same principles often help when you’re trying to recover payment without a formal agreement.

Important: while many contracts can be verbal, some specific transactions (like certain property matters) can have extra formal requirements. If your dispute involves high-value assets, property, or complex commercial arrangements, getting legal advice early is a smart move.

What To Do First When You’re Owed Money But No Contract

When you’re owed money with no contract in place, the first step is to slow down and get organised. Your goal is to build a clear timeline showing:

• what was agreed (even if informally)
• what you delivered
• what was invoiced
• what (if anything) has been paid
• what the client is now disputing (if they’re disputing anything)

1. Gather Evidence (Think “Paper Trail”)

You’re looking for anything that shows a deal existed and what the terms were. Common examples include:

• quotes, estimates, or proposals you sent
• emails or text messages confirming the scope, timing, or price
• purchase orders or order confirmations
• invoices and reminders
• delivery confirmations, photos, job sheets, timesheets, or completion sign-offs
• messages where the customer thanks you, confirms the work, or requests changes
• bank records showing deposits or part-payments

Even a client saying “Can you start Monday?” or “Looks great, thanks” can help show acceptance and performance.

2. Check Whether A Quote Or Invoice Was Accepted

A very common “no contract” situation is actually a “quote accepted, then invoice issued” situation.

If you sent a quote and the customer accepted it (even by email, text, or verbally), that may be enough to establish the agreement and the price. This is one reason it’s helpful to understand whether a quotation is legally binding in a business context.

3. Write A Clear Payment Request

Before you jump into legal steps, send a calm, professional payment request that:

• attaches the invoice
• states the amount owing
• confirms what the invoice relates to (job, delivery, service dates)
• gives a clear deadline for payment (for example, 7 days)
• asks them to raise any genuine dispute in writing by a certain date

This does two things: it creates more evidence, and it flushes out whether the issue is “won’t pay” or “thinks there’s a dispute”.

4. Be Careful About Threats Or Public Reviews

It’s understandable to feel frustrated. But avoid threats that could backfire (for example, threatening to “ruin them online” or contacting their customers). Keep communication factual and businesslike. If it escalates, you want to be the party that looks reasonable.

How To Prove The Deal And The Amount Owing (Without A Written Contract)

In a payment dispute, the key question often becomes: what was agreed? When there’s no formal contract, the decision-maker (whether that’s the Disputes Tribunal, a lawyer negotiating, or a court) will typically look at:

• communications between the parties (emails, texts, messages)
• usual industry practice (for example, whether deposits are standard, whether variations are charged)
• what happened in practice (what you delivered and what they accepted)
• previous dealings between you and that client (if you’ve worked together before)
• your standard terms (if you regularly provide them, even if this time they weren’t signed)

Acceptance By Conduct

One of the most helpful concepts for business owners is that people can “accept” an arrangement by what they do, not just what they sign.

For example:

• they book you in and provide access to the site
• they approve drafts or milestones
• they take delivery of goods and use them
• they ask you to continue with additional work

If they benefited from your work and didn’t object at the time, that can support your claim that the services were supplied under an agreement, and that payment is due.

What If The Client Says The Price Wasn’t Agreed?

This is where things can get tricky. If the customer disputes the amount, you’ll want to show:

• how the price was set (quote, hourly rate, agreed milestones)
• that they were informed of the pricing before or during the work
• that they had a chance to object (and didn’t)

If there genuinely wasn’t an agreed price, you may still have a claim for a “reasonable” amount for the work supplied (depending on the circumstances). This is one reason it’s so important to keep written confirmations, even for small jobs.

What If They’re Complaining About Quality?

Sometimes non-payment comes with a complaint about quality, delays, or scope. At that point, it’s not purely a debt issue - it’s a dispute about performance.

Keep records of:

• any approvals they gave during the project
• variation requests (and your responses)
• handover notes, delivery confirmations, and completion messages
• any attempts you made to fix issues (if relevant)

Also be mindful of NZ consumer protection laws, like the Fair Trading Act 1986 (misleading conduct, representations) and the Consumer Guarantees Act 1993 (consumer guarantees for certain goods/services).

Note: the Consumer Guarantees Act 1993 generally applies where the customer acquires goods or services as a “consumer” (not “in trade”). In many business-to-business transactions, it won’t apply (or it may be able to be contracted out of in writing where the parties are in trade). If your customer is disputing payment based on alleged CGA rights, it’s worth getting advice on whether the CGA applies in your particular circumstances.

Your Options For Recovering Payment In NZ (From Friendly Follow-Up To Formal Action)

There’s no single best path for every unpaid invoice. The “right” approach depends on the amount, the relationship, and whether there’s a real dispute.

Option 1: Negotiate A Practical Outcome

If you want to preserve the relationship (or simply recover cash fast), negotiation can be the most cost-effective move.

Common outcomes include:

• a payment plan (weekly/fortnightly)
• part-payment now, balance by a fixed date
• a small discount in exchange for immediate payment (only if that makes commercial sense)
• agreement to rectify a limited issue, in exchange for payment of the undisputed portion

Whatever you agree, confirm it in writing straight away.

Option 2: Send A Formal Letter Of Demand

If friendly reminders aren’t working, a letter of demand is often the next step. This is a written letter that clearly sets out:

• what is owed, and why
• the evidence you’re relying on
• the deadline to pay
• what you’ll do if they don’t pay (for example, Disputes Tribunal or court)

A well-written letter of demand can be enough to prompt payment because it shows you’re organised and serious.

Option 3: Use The Disputes Tribunal (For Many Small Business Debts)

For many small businesses, the Disputes Tribunal is a practical option for lower-value disputes. It’s designed to be accessible without needing a lawyer to appear (although you can still get legal help behind the scenes).

The Tribunal can deal with many types of claims, including unpaid invoices, and it often comes down to evidence and common sense.

If you’re owed money and there’s no written contract, the Tribunal will typically look at your communications, invoices, and what happened in practice - which is why your evidence file matters so much.

Option 4: Debt Collection Or Court Action (Where Appropriate)

If the amount is significant, the customer is avoiding you, or you need a more formal enforcement pathway, you may consider court action or engaging a debt collector.

Exactly what’s appropriate depends on:

• the amount owed
• whether the debt is disputed
• whether you have an identifiable person/entity to sue
• whether the debtor has assets or income to enforce against

Also consider the commercial reality: “winning” isn’t always the same as “getting paid”. It can be worth getting advice on prospects of recovery before you spend time and money escalating.

Option 5: Don’t Forget Time Limits

In New Zealand, legal claims are subject to limitation periods (time limits). These rules can be complex and depend on the type of claim, but the practical takeaway is: don’t leave unpaid invoices sitting for years.

As a general guide, many civil claims (including many debt claims) are commonly subject to a 6-year primary limitation period under the Limitation Act 2010, but there are exceptions and different start dates can apply depending on the nature of the claim and the facts. If you’ve been chasing payment for a while, it’s worth getting advice on your next step so you don’t accidentally lose leverage over time.

How To Prevent This Happening Again (Without Scaring Off Customers)

Once you’ve been burned by a non-paying client, it’s tempting to swing to the other extreme and demand a 20-page agreement for every small job. But you can protect yourself without making your sales process painful.

1. Put Your Terms In Place Early

Even a short set of written terms can make a huge difference. A solid set of Terms of Trade can cover things like:

• when payment is due
• deposit requirements
• what happens if the customer delays access or approvals
• variation/change request charges
• interest on late payments (if you want to charge it)
• recovery costs (where enforceable)

The key is making sure the customer actually sees the terms and that they apply (for example, referencing them on quotes, order forms, or onboarding emails).

2. Use A Proper Service Agreement For Higher-Risk Work

If you’re doing project-based work, ongoing retainer services, or anything where scope creep is likely, a tailored Service Agreement can save you a lot of pain later.

This is especially important where:

• the scope is complex or may change
• there are multiple stakeholders approving work
• there are milestones and deliverables
• you’re relying on the customer to provide information or access

3. Always Confirm The Scope And Price In Writing (Even If It’s Just An Email)

You don’t need a formal contract for every deal, but you do need a clear record. A simple “Just confirming…” email can make your position far stronger if payment goes sideways later.

4. Check Who You’re Contracting With

It sounds basic, but it matters: are you invoicing the correct legal entity?

For example:

• a person trading under a name is not the same as a limited company
• you may need the NZBN, company number, or full legal name on invoices

If you end up in a dispute, you want to be sure you’re chasing the right party.

5. Have Your Contracts Reviewed Before You Use Them Repeatedly

Templates can miss key protections, and “borrowed” terms may not fit your business model. If you’re rolling out terms to customers regularly, a Contract Review can help you tighten the clauses that matter most for getting paid and managing scope.

6. Consider Security For Larger Debts (If It Fits Your Industry)

If you’re supplying goods on credit or providing high-value equipment/services, you might want additional protection - for example, security interests or guarantees. This can get technical quickly, but it can also be a game-changer when a customer doesn’t pay.

Depending on your circumstances, you might look at tools like a General Security Agreement or other credit protections, particularly for repeat commercial customers.

Important: taking “security” is not just about signing a document. For example, security interests under the Personal Property Securities Act 1999 often need to be set up correctly (including, in many cases, registration on the PPSR) to be effective against other creditors or in an insolvency. If you’re considering a security arrangement, it’s worth getting advice so it actually gives you the protection you expect.

Key Takeaways

• A contract in New Zealand doesn’t always need to be written - if you’re owed money and there’s no written contract, you may still be able to enforce payment based on emails, texts, quotes, invoices, and conduct.
• Your first priority is to gather evidence and create a clear timeline showing what was agreed, what you delivered, and what remains unpaid.
• If the customer disputes the debt, focus on proving acceptance, the agreed scope/price (or what is reasonable), and that the customer benefited from the work or goods supplied.
• Start with a firm but professional payment request, then consider escalating to a letter of demand and (where appropriate) the Disputes Tribunal or court pathways.
• To avoid repeat issues, confirm scope and price in writing, use strong Terms of Trade or a Service Agreement, and consider contract review before you rely on your documents long-term.

If you’re owed money but no contract and you’re not sure what your next step should be, we can help you work out your options and put stronger payment protections in place for the future. You can reach us at 0800 002 184 or team@sprintlaw.co.nz for a free, no-obligations chat.