Do I Need Terms For Selling Preorders Online?

Mia runs a small online skincare store in Auckland. Her new serum is getting attention on Instagram, so she opens preorders for 500 units and promises shipping in early October. Then her packaging supplier misses a production slot, and the first batch won't arrive until November.

That sort of delay is frustrating, but it's also normal in ecommerce. Preorders can be a smart way to test demand, manage cash flow and build hype around a launch.

The catch is that customers are paying now for something they won't receive straight away. Your terms need to be clear about timing, refunds and what happens if fulfilment doesn't go to plan - and they still need to sit comfortably with New Zealand consumer law.

Do I Need Preorder Terms And Conditions In New Zealand?

Yes, if you're selling preorders online in New Zealand, you should have clear preorder terms and conditions as part of your online shop terms and conditions.

Preorders create a slightly different risk profile from ordinary online sales. Your customer is paying based on your promise that a product will become available later. If the product is delayed, changed, limited in quantity or cancelled, your usual website terms and conditions might not answer the questions that matter.

Good preorder terms should explain:

• whether the customer is paying in full now, paying a deposit, or authorising a later payment
• the estimated dispatch or delivery timeframe
• whether the product details might change before release
• what you'll do if your supplier or manufacturer is delayed
• when the customer can cancel and get a refund
• what happens if you can't fulfil all orders
• how you'll contact customers about updates

Terms don't just protect you when something goes wrong. They also help customers decide whether they're comfortable buying on preorder in the first place.

For example, a clothing brand might say: This item is a preorder. We expect to dispatch orders in the week starting 4 November. This date is an estimate and we'll email you if the timing changes materially. That sort of wording is much safer than making a hard promise you might not be able to keep.

Templates can be a useful starting point, but preorder wording works best when it's tailored to your product, supply chain, payment setup and customer journey.

How Do The Consumer Guarantees Act And Fair Trading Act Apply To Preorders?

The Consumer Guarantees Act 1993 and Fair Trading Act 1986 both apply to preorders, so you can't use your terms to avoid your core obligations to customers.

Under the Consumer Guarantees Act 1993, goods you supply to consumers need to meet guarantees such as acceptable quality, fitness for purpose, matching the description and arriving within any agreed time, or within a reasonable time if no time is agreed. If you organise delivery, the delivery service also needs to be carried out with reasonable care and skill.

A preorder doesn't change that. The fact the customer knew the item wasn't available yet doesn't mean they accepted any delay, defect or substitution.

The Fair Trading Act 1986 also matters because it prohibits misleading and deceptive conduct, false representations and unsubstantiated claims in trade. So, if you say a product will ship in September, is a limited release, is made in New Zealand, or is available in a particular colour or material, you need reasonable grounds for saying that.

Practical examples of risky preorder claims include:

• Guaranteed delivery before Christmas, when your supplier has only given you an estimate
• Only 100 units available, when you might order more if demand is high
• Ships in 2 weeks, when the product is still in overseas production
• No refunds on preorders, when customers may have legal refund rights

If your customer is another business, you may be able to contract out of some Consumer Guarantees Act obligations in limited circumstances, but only where the law allows it and the wording is fair and reasonable. For consumer sales, you shouldn't try to contract out.

Can I Say Preorders Are Non-Refundable?

No, not as a blanket rule for consumer sales. You can usually say you don't offer change-of-mind refunds, but you can't take away refund rights customers have under the Consumer Guarantees Act or Fair Trading Act.

This is where many preorder policies go wrong. A strict all preorders are final policy might feel commercially helpful, especially if you're using preorder money to fund manufacturing. But if the product is never supplied, is significantly delayed, doesn't match the description, or has a serious fault, the customer may be entitled to a remedy.

Your refund policy should separate two different situations.

Change-Of-Mind Cancellations

You can set your own rules for change-of-mind cancellations, as long as they're clear before the customer buys and aren't misleading. For example, you might say customers can cancel within 24 hours, or before production starts, but not after that unless you agree.

If you sell customised or limited-run goods, you may want tighter cancellation rules because you may not be able to resell the product easily.

Legal Refund Rights

You can't refuse a refund simply because your policy says so if the customer has a legal right to one. This could happen if:

• you can't supply the product at all
• you miss a firm delivery date that was a key part of the sale
• the delay becomes unreasonable
• the product is materially different from what was advertised
• the product has a serious fault

A balanced clause might say that preorders aren't refundable for change of mind after a certain point, but this doesn't limit any rights the customer has under New Zealand consumer law. That gives you a commercial position without overstating what the law allows.

What Should My Preorder Terms Say About Delays?

Your preorder terms should be honest about what is an estimate, what is a firm promise, and what you'll do if the expected date changes.

Customers can be surprisingly patient when you're upfront with them. Problems usually start when your website makes timing sound certain, then you go quiet when the date slips.

For ecommerce preorder terms, consider covering:

• Estimated dispatch dates: Say whether the date is an estimate or a guaranteed deadline.
• Reasons for delay: Mention realistic risks such as supplier delays, customs processing, manufacturing issues or freight disruption.
• Update process: Tell customers how you'll contact them and how often you'll provide updates if there's a material delay.
• Customer choices: Explain when customers can keep waiting, cancel or receive a refund.
• Split shipments: Say whether you'll send available items first or wait until the whole order is ready.
• Address changes: Ask customers to keep their delivery details current during the preorder period.

Be careful with force majeure clauses. A clause that says you're not responsible for anything outside your control can help explain delay risks, but it shouldn't be used to deny refunds where consumer law gives the customer a remedy.

Say Mia's skincare store takes 300 preorders at $89 each. Her product page says dispatches by 10 October. On 1 October, she learns the products won't leave the manufacturer until 5 November. If she immediately emails customers, explains the new timing and offers the option to wait or cancel for a refund, she's in a much stronger position than if she says nothing until customers start complaining.

The legal answer can depend on how definite your original promise was and how long the delay is. A one-week delay on an estimated date may be fine. Missing a guaranteed launch date by two months is a very different situation.

What Clauses Should I Include In Preorder Terms?

Your preorder terms should cover the full path from product listing to payment, fulfilment and refunds, not just a single sentence at checkout.

Here's a practical outline you can use when planning your terms. This isn't a finished legal document, and a lawyer should tailor it before you use it.

1. Preorder Status: State clearly that the product isn't currently available for immediate dispatch.
2. Product Description: Describe the product, including any features, sizing, colour, materials or inclusions that matter to the sale.
3. Estimated Timing: Set out the expected dispatch or delivery window and whether it's an estimate or firm commitment.
4. Payment Terms: Explain whether payment is taken in full, as a deposit, or later when the product is ready.
5. Order Confirmation: Say when the order is accepted and what confirmation the customer will receive.
6. Delays And Updates: Explain how you'll notify customers about material delays or changes.
7. Product Changes: Say what happens if the final product differs from the original listing.
8. Limited Stock Or Allocation: Explain how you'll deal with overselling, supplier shortages or order priority.
9. Cancellations: Set out any change-of-mind cancellation window and any limits on cancellation.
10. Refunds And Remedies: Explain refunds, store credits and other remedies, while preserving legal consumer rights.
11. Delivery Details: Tell customers they need to provide accurate shipping details and update them if they move.
12. Privacy: Explain how you'll use customer contact details for preorder updates, consistent with the Privacy Act 2020.

Your terms should appear before payment, not buried after checkout. Customers should have a real chance to read them before they commit.

You should also make your product page do some of the work. If the product is a preorder, say it near the price, near the add-to-cart button and again at checkout. A customer shouldn't have to hunt through fine print to find out the item won't ship for eight weeks.

What Should I Do If A Preorder Has Gone Wrong?

If a preorder has gone wrong, deal with the customer communication first, then work through refunds, supply options and records in an organised way.

Silence is usually what makes the situation worse. Even if the delay isn't your fault, you're the business that took the customer's money, so customers will expect you to manage the update.

A sensible order of steps is:

1. Confirm The Facts: Get the latest information from your supplier, freight provider or manufacturer, including dates and quantities.
2. Check What You Promised: Review the product page, checkout wording, confirmation email and any ads that mentioned timing or features.
3. Contact Customers Promptly: Explain what has happened, what the new expected timing is, and what options they have.
4. Offer A Clear Choice Where Needed: If the delay is material or the product can't be supplied, give customers a practical option to wait or receive a refund.
5. Keep Records: Save supplier emails, customer updates, refund decisions, website screenshots and stock reports.
6. Update Your Website: Don't keep taking preorders on the old timing if you know it's wrong.
7. Review Your Terms: After the issue is under control, update your terms and checkout process so the same gap doesn't happen again.

For example, Tane sells limited edition headphones online. He takes 120 preorders at $149 each and says they will ship in late June. His supplier can only deliver 80 units in June, with the rest expected in August.

Tane should work out how he'll allocate the 80 units, contact the remaining 40 customers, explain the August timing and give them a fair option to wait or receive a refund. If he simply fulfils the loudest complaints first and leaves everyone else guessing, he may create avoidable Fair Trading Act and customer service issues.

You may also need to think about payment processors. Long fulfilment periods can increase chargeback risk, especially if customers feel they weren't told the item was on preorder. Clear records of the customer's agreement to your preorder terms and conditions can help you respond.

How Should I Display Preorder Terms On My Website?

You should display preorder terms prominently before checkout, because hidden terms are harder to rely on and can create Fair Trading Act risk.

A customer should know three things before they pay:

• the item is a preorder
• when you expect to dispatch or deliver it
• what happens if that timing changes

Good places to include preorder wording include:

• the product title or badge, such as Preorder or Ships In November
• the product description, with the expected timeframe
• a short notice near the add-to-cart button
• the cart and checkout page
• the order confirmation email
• a dedicated preorder section in your ecommerce terms and conditions

Try to avoid vague phrases like coming soon if the customer is paying now. Use a realistic timeframe instead, such as expected dispatch between 4 and 15 November. If you don't know the date yet, say that clearly and think carefully about whether you're ready to take payment.

Your advertising should match your website terms too. If your Instagram ad says ships next week, but your checkout terms say dispatch date is an estimate only, that inconsistency can cause trouble. The customer will usually rely on the clearer, more attractive promise.

Payment wording also matters. If you're taking a deposit, say whether it's refundable and when the balance is due. If you're taking full payment, say when the order will be fulfilled and what refund rights apply if it isn't.

Key Takeaways

• Preorder terms and conditions in New Zealand should clearly explain timing, payment, cancellation, refunds and what happens if supply is delayed.
• The Consumer Guarantees Act 1993 still applies to consumer preorders, so you can't remove legal refund rights through your terms.
• The Fair Trading Act 1986 means your product pages, ads and checkout wording need to be accurate and supported by reasonable grounds.
• A preorder refund policy can limit change-of-mind cancellations, but it shouldn't say all preorders are non-refundable in every situation.
• Clear website notices, order confirmations and customer updates can reduce chargebacks, complaints and avoidable disputes.
• Your terms should be tailored to your product, supply chain and payment setup, especially if you sell limited runs, customised goods or long-lead items.

If you'd like help with your ecommerce terms, preorder refund wording, product page notices or customer cancellation clauses, you can reach us at 0800 002 184 or team@sprintlaw.co.nz for a free, no-obligations chat.