What Are Terms Of Trade? (2026 Updated)

If you’re selling products or services, chances are you’ve had that moment where something goes wrong and you think: “Wait… what were we actually agreeing to here?”

That’s exactly where Terms of Trade come in. They set the rules for how you do business with your customers (and sometimes other businesses), covering things like payment timeframes, delivery, refunds, cancellations, and what happens if there’s a dispute.

This guide is updated to reflect current, practical expectations for New Zealand businesses (including online selling and modern invoicing practices), so you can set your legal foundations up properly and trade with confidence from day one.

What Are Terms Of Trade (And Why Do They Matter)?

Terms of Trade (often just called “terms”) are the conditions you trade on. They’re usually a standard set of clauses you apply across your sales, rather than negotiating a new contract every time you quote a job or ship an order.

In plain terms, your Terms of Trade are there to:

• Set expectations upfront (so customers know what to expect and you know what you’re delivering).
• Reduce payment issues by clarifying due dates, late fees, credit terms, and debt recovery processes.
• Manage legal risk with clear rules on liability, warranties, delays, and dispute resolution.
• Support your operations by aligning legal terms with how you actually run the business (quotes, deposits, scheduling, stock availability, shipping, etc.).
• Make disputes easier because you can point to a written agreement rather than relying on “what was said”.

Even if you already “have terms”, it’s worth checking whether they actually match your current business model. For example, if you now sell online, take payment in advance, offer subscriptions, or use contractors to deliver services, your old terms might not cover the risks properly.

Are Terms Of Trade Legally Binding In New Zealand?

They can be, as long as they form part of the contract between you and your customer.

Usually, that means you need to make sure your customer had reasonable notice of the terms and agreed to them (for example, by signing, ticking a box online, or proceeding after being told the terms apply).

This is why “terms on the back of an invoice” can be risky if the customer only sees them after the sale is done. At that point, it may be too late for those terms to be part of the agreement.

Terms Of Trade Vs Terms And Conditions: Is There A Difference?

In practice, in NZ business, people often use these interchangeably.

Sometimes “Terms of Trade” is used more in B2B or invoice-based selling (e.g. trades, wholesale, manufacturing, services), whereas “Terms and Conditions” is common for consumer-facing or online businesses.

What matters most is not the label, but whether the document clearly sets the rules of your sale and is properly incorporated into your customer contracts.

What Should Terms Of Trade Include?

The right Terms of Trade will depend on what you sell and how you sell it. But for most NZ businesses, there are a few “core” clauses that are worth getting right.

Common items to include are:

• Definitions and scope (who the terms apply to, what products/services are covered, and whether you can update the terms).
• Quotes and pricing (how long quotes are valid, whether prices can change, what happens with variations, and whether GST is included).
• Orders and acceptance (how customers place orders and when you can accept or reject them).
• Payment terms (deposit requirements, due dates, payment methods, late payment interest, and debt recovery costs).
• Delivery / performance (timeframes, shipping risk, who pays freight, access requirements for onsite services, and what happens if there’s a delay).
• Cancellation and refunds (when a customer can cancel, what fees apply, and how you handle rescheduling).
• Returns and faulty goods (aligned to the Consumer Guarantees Act 1993 where applicable).
• Warranties and disclaimers (what you promise, what you don’t, and what’s legally allowed).
• Limitations of liability (caps, exclusions, and what losses you won’t cover).
• Title and risk (when ownership transfers, and what happens if goods aren’t paid for).
• Privacy and data handling (especially if you collect personal information to fulfil orders, provide support, or run accounts).
• Dispute resolution (a process for raising issues, timeframes, and escalation steps).

If your business relies on invoicing and repeat customers, it’s also common to align your Terms of Trade with a Terms of Trade document that can sit behind your quotes, account applications, and ongoing supply arrangements.

Payment And Credit Terms: Where Many Disputes Start

Late payment is one of the most common pain points for small businesses. Your Terms of Trade are your chance to be crystal clear about:

• when invoices are due (e.g. “7 days from invoice date”, “end of month”, or “payment before dispatch”),
• what happens if payment is late (interest, fees, suspension of work), and
• who pays debt recovery costs if you have to chase payment.

If you offer customers credit accounts, you’ll often want credit-specific terms too (and to ensure your onboarding process actually captures acceptance of your terms).

Returns, Refunds, And The Consumer Guarantees Act

If you sell to consumers (not just businesses), your terms have to sit alongside NZ consumer protection laws.

In particular, the Consumer Guarantees Act 1993 (CGA) gives consumers certain automatic guarantees when they buy goods or services from a business. For example, goods generally must be of acceptable quality and fit for purpose, and services must be carried out with reasonable care and skill.

Your Terms of Trade can explain your returns process and timeframes, but they can’t take away CGA rights for consumer customers.

If you’re dealing with refunds and exchanges regularly (especially in retail or ecommerce), it can help to have a clear Returns, Refunds And Exchanges approach that matches your terms and your customer communications.

How Do Terms Of Trade Interact With New Zealand Laws?

It’s tempting to think of Terms of Trade as “whatever you want to put in writing”. In reality, they need to work with NZ law, not against it.

Here are a few key legal areas that commonly affect Terms of Trade in New Zealand.

Fair Trading Act 1986 (Advertising And Sales Practices)

The Fair Trading Act 1986 is about truthful selling. It prohibits misleading or deceptive conduct in trade, false representations, and other unfair practices.

This matters for your terms because you want consistency between:

• what you advertise,
• what your sales team says,
• what your quote promises, and
• what your Terms of Trade say.

If your website says “Next day delivery”, but your terms say delivery timeframes are only estimates and delays are always possible, you can end up with customer complaints (and legal risk) because the messaging isn’t aligned.

Consumer Guarantees Act 1993 (Consumer Sales)

As mentioned above, the CGA implies guarantees into consumer contracts. Your terms should acknowledge that consumer rights apply where relevant and avoid overly aggressive “no refunds ever” wording that can create compliance issues.

If you sell business-to-business (B2B), you may be able to contract out of the CGA in some circumstances (and only if it’s done properly and the goods/services are supplied for business purposes). This is one of those areas where getting tailored legal advice is important, because “contracting out” isn’t a one-size-fits-all exercise.

Privacy Act 2020 (Customer Information)

If you’re collecting customer personal information (names, addresses, contact details, billing info, delivery instructions, and sometimes health information depending on the industry), you need to comply with the Privacy Act 2020.

Your Terms of Trade often cross over with privacy because they may describe:

• how you communicate with customers,
• how you share data with couriers or subcontractors, and
• what happens if an account goes to debt collection.

In most cases, you’ll also want a separate Privacy Policy that explains what information you collect, why, how you store it, and how customers can request access or correction.

Unfair Contract Terms (Especially If You Use Standard Terms)

If you use standard form terms (which most businesses do), it’s important to ensure the terms are fair and reasonable for the type of transaction.

Even in B2B contexts, overly one-sided clauses can create real problems:

• they can damage customer relationships,
• they can be hard to enforce in practice, and
• they can increase dispute risk because customers feel blindsided.

A well-drafted set of terms is usually balanced: it protects your business, but it’s still commercially workable and aligns with how you actually deliver your goods/services.

How Do You Make Sure Your Terms Of Trade Apply To Every Sale?

This is where many businesses trip up. Having Terms of Trade is one thing. Making sure they apply to your day-to-day transactions is another.

To help your terms be enforceable, you generally want to focus on timing and proof:

• Timing: the customer should see the terms before (or at the time) the contract is formed.
• Proof: you should be able to show how the customer agreed to them.

Practical Ways To Incorporate Terms Of Trade

Depending on how you sell, common methods include:

• Quotes: include a short “terms apply” statement on the quote with a link or attachment, and require acceptance.
• Online checkout: use a tick-box confirming the customer accepts the terms before payment.
• Account applications: include acceptance wording and ensure it’s signed by the customer.
• Purchase orders: respond confirming you accept the PO subject to your terms (watch out for “battle of the forms” issues).
• Ongoing supply relationships: have a signed supply agreement, and attach your terms or incorporate them by reference.

If you operate with broader customer contracting (especially for services), it might make sense to use a more tailored Service Agreement for larger jobs, and reserve Terms of Trade for smaller, repeat transactions.

Be Careful With “Terms On Invoice Only”

Invoices are often issued after the contract is already in place (for example, once goods are shipped or a job is completed).

If the customer didn’t have notice of the terms until the invoice arrived, a court may find those terms weren’t properly incorporated into the deal. That can leave you relying on default legal principles rather than your preferred commercial rules.

In other words: it’s usually better to introduce your terms at the quote/order stage, not at the invoicing stage.

Common Terms Of Trade Mistakes (And How To Avoid Them)

Most Terms of Trade problems don’t come from bad intentions. They come from using a template that doesn’t match your business, or from not updating terms as your business grows.

Here are some common issues we see.

1. Using Generic Templates That Don’t Match Your Business

A template might include clauses you don’t understand, don’t need, or can’t actually comply with operationally.

For example, if your terms say “all orders shipped within 24 hours” but you run a made-to-order service, you’re building future disputes into your workflow.

It’s usually better to treat your terms like a real business asset: drafted properly, aligned to how you trade, and reviewed as you grow.

2. Overpromising In Marketing But Limiting In The Terms

If your advertising and sales messaging is far more generous than your terms, customers will rely on what you said publicly.

Make sure your website, social media posts, proposal documents, and Terms of Trade all tell the same story.

3. Not Covering Variations, Extra Work, Or Scope Creep

This is especially common for service providers (designers, consultants, trades, agencies).

Your terms should set out:

• how variations are requested and approved,
• how additional costs are calculated, and
• whether timelines move when the scope changes.

Without these rules, you can end up doing extra work that’s hard to invoice for later (or you can face customer pushback because they didn’t expect additional charges).

4. Unclear Cancellation And Rescheduling Rules

If you book out time, allocate staff, order stock, or turn down other jobs, cancellations can cost you real money.

Clear cancellation terms can help you recover some of that cost (as long as the fees are reasonable and communicated upfront).

5. Forgetting Data And Online Selling Reality

If you sell online, your terms often interact with your website policies, payment gateways, shipping providers, and customer accounts.

Make sure your legal documents work together, especially where you also have broader website rules in place like Website Terms And Conditions.

6. Not Updating Terms When Your Business Changes

Businesses evolve. You might start offering subscriptions, new delivery methods, bundling, wholesale pricing, or international shipping.

If your terms haven’t changed since your early days, it’s worth checking whether they still protect you (and whether they still make sense to your customers).

Key Takeaways

• Terms of Trade are the rules you trade on and can help prevent disputes by setting expectations around payment, delivery, cancellations, refunds, and liability.
• To be enforceable, your terms need to be properly incorporated into your sales process (ideally at the quote/order stage, not only on invoices).
• Your Terms of Trade should align with NZ laws like the Fair Trading Act 1986, Consumer Guarantees Act 1993, and Privacy Act 2020.
• Consumer-facing businesses can’t contract out of consumer guarantees for consumer customers, so avoid “no refunds ever” style clauses that cut across statutory rights.
• Well-drafted terms should match how you actually operate (including variations, scope changes, timeframes, and online processes) so you can apply them confidently in real life.
• Don’t rely on generic templates-Terms of Trade are a key risk-management tool and are most effective when tailored to your business.

If you’d like help drafting or reviewing your Terms of Trade (or making sure they’re properly built into your quoting and invoicing process), you can reach us at 0800 002 184 or team@sprintlaw.co.nz for a free, no-obligations chat.