Alex is Sprintlaw's co-founder and principal lawyer. Alex previously worked at a top-tier firm as a lawyer specialising in technology and media contracts, and founded a digital agency which he sold in 2015.
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If you run a business, you’ve probably seen the phrase “we reserve the right…” in terms and conditions, website policies, customer agreements, and even invoices.
It feels simple enough. But the meaning of “reserve the right” in a contract isn’t “we can do anything we want”. In New Zealand, that wording still needs to sit within contract law, consumer law, and (in some cases) employment and privacy obligations.
Used properly, a “reserve the right” clause can help you stay flexible and protect your business from common disputes. Used poorly, it can create uncertainty, be unenforceable, or raise consumer law issues (especially if it’s unfair, unclear, or misleading).
Below, we’ll break down what it actually means, when it works, when it doesn’t, and how to use it in a way that’s practical and legally safer for NZ businesses. This article is general information only and isn’t legal advice.
What Does “Reserve The Right” Mean In A Contract?
In plain English, the “reserve the right” meaning is that you’re keeping a specific power or option available to you under the contract, even if you don’t plan to use it right now.
For example, you might “reserve the right” to:
- update your prices after a certain notice period
- refuse service in certain circumstances
- change how your membership works
- pause services for maintenance
- cancel orders that are out of stock
In practice, this wording is usually trying to do one of two things:
- Clarify discretion: you have discretion to make a decision (e.g. approve/decline a return).
- Build flexibility into the contract: you may need to change something later (e.g. policies, opening hours, service inclusions).
But here’s the key point: “Reserving a right” doesn’t automatically make the right enforceable. The clause still needs to be drafted clearly, be consistent with the rest of the contract, and comply with NZ law.
Why NZ Businesses Use “Reserve The Right” Clauses
Most small businesses use “reserve the right” clauses for practical reasons. Your business changes, your suppliers change, your costs change, and customer expectations change.
A well-drafted clause can reduce the risk of disputes by setting expectations upfront.
Common Situations Where You Might Need It
- Ecommerce and retail: stock availability, shipping timelines, promotions, refunds processes.
- Service businesses: rescheduling policies, scope changes, late payment consequences.
- Subscriptions and memberships: plan changes, feature updates, price changes, fair use limits.
- Marketplaces and platforms: content removal, account suspension, moderation rules.
- Events: changes to venue, speakers, dates, or cancellation policies.
This is also why many businesses formalise their customer-facing rules in a single set of Business Terms rather than scattering them across emails and invoices.
When “Reserve The Right” Clauses Can Backfire (And What NZ Law Says)
It’s tempting to write a broad line like: “We reserve the right to change these terms at any time without notice.”
But in NZ, overly broad clauses can create legal risk rather than reduce it. Here are the main problem areas.
1) Contract Law: Uncertainty And Internal Contradictions
A contract works best when both sides can understand what they’re agreeing to. If your clause is so broad that it’s unclear what you can change, when, and how, it may be hard to enforce (or it may be interpreted against you).
Also, if your “reserve the right” clause contradicts another part of the contract, the document can become messy fast. For example:
- One clause says “fixed price for 12 months”, another says “we reserve the right to change prices at any time”.
- One clause guarantees delivery times, another says “delivery times are estimates only and may change without notice”.
Good drafting is about aligning the “flexibility” clause with the actual commercial promise you want to make.
2) Fair Trading Act 1986: Don’t Use It To Mislead Customers
The Fair Trading Act 1986 is a big one for business owners. It broadly prohibits misleading or deceptive conduct in trade.
Even if your contract says you “reserve the right” to do something, you still can’t:
- advertise one thing and deliver something materially different
- use fine print to undercut headline claims
- create an overall impression that misleads customers
For example, if your website says “cancel anytime” but your terms then “reserve the right” to lock customers into a minimum term, that mismatch can cause serious issues.
3) Consumer Guarantees Act 1993: You Can’t Contract Out (In Most Consumer Sales)
If you sell products or services to a customer who is acquiring them for personal, domestic, or household use, the Consumer Guarantees Act 1993 (CGA) provides automatic guarantees (for example, acceptable quality and fitness for purpose).
A “reserve the right” clause generally can’t remove or limit those CGA rights for consumer customers. For example, “we reserve the right to refuse refunds in all circumstances” may not align with the CGA if the product is faulty.
If you sell to business customers, you can sometimes contract out of the CGA, but only where the customer is acquiring the goods or services for business purposes and the contracting-out wording is included clearly and properly (and it’s not a one-size-fits-all approach).
4) Unfair Contract Terms: “One-Sided” Rights Can Be Challenged
For standard form contracts used with consumers, unfair contract term rules under the Fair Trading Act 1986 may apply. A clause that gives you a very broad unilateral power (like changing price, scope, or key terms without a real reason or notice) can be at risk if it creates a significant imbalance and isn’t reasonably necessary to protect your legitimate interests.
This doesn’t mean you can’t keep flexibility. It just means you should draft it in a way that’s:
- specific (what can be changed?)
- reasonable (why can it be changed?)
- transparent (how will customers find out?)
- balanced (does the other party have a remedy, like cancelling?)
How To Use “Reserve The Right” In Contracts (Without Overreaching)
If you want to use this clause well, the goal is to keep the protection while staying clear and fair.
Here are practical drafting principles that usually make a “reserve the right” clause stronger and easier to rely on.
Be Specific About The Right You’re Reserving
Instead of “we reserve the right to change anything”, try to tie it to a defined area. For example:
- pricing (and when it can change)
- delivery methods (and when a substitute method might be used)
- account access (and what behaviour triggers suspension)
- returns process (and what proof is required)
Specificity reduces arguments later about what you meant.
Build In A Notice Process
Notice is often what turns a harsh clause into a workable one. Depending on your business model, that could be:
- updating terms on your website and emailing customers
- providing X days’ notice of price changes
- notifying users in-app
Notice also supports better customer relationships (and fewer escalations), because customers don’t feel blindsided.
Link The Clause To A Reason (Where Possible)
“We reserve the right to vary services” lands better if it’s connected to a real reason, like:
- safety
- legal compliance
- supply chain disruptions
- maintenance
- fraud prevention
This is also helpful if a clause is later challenged as unfair or unreasonable.
Give The Customer A Remedy (Especially For Big Changes)
If you’re making a material change (for example, a price increase or reduction of key features in a subscription), it’s often sensible to allow customers to cancel before the change takes effect.
This doesn’t have to be complicated. It can simply be a right to terminate within a notice period (or at the end of the current billing cycle).
Make Sure The Clause Matches Your Actual Processes
A clause should reflect how you really operate. If you say you’ll give 14 days’ notice, you need to have systems to actually do that.
This is where well-structured documents like Website Terms and Conditions can help, because they’re designed to be customer-facing, operationally practical, and consistent.
Examples Of “Reserve The Right” Clauses (And What They’re Really Doing)
There isn’t a single perfect “reserve the right” clause. The best version depends on what you sell, who you sell to (consumer vs business), and how you deliver your products or services.
But to make this more concrete, here are common examples and what they’re trying to achieve.
“We Reserve The Right To Refuse Service”
Why businesses use it: to manage risk from abusive behaviour, non-payment, fraud, or safety issues.
Watch outs: you still need to consider discrimination laws and whether refusing service is being done for a lawful reason. You’ll want your internal policies to support consistent decision-making.
“We Reserve The Right To Change Our Prices”
Why businesses use it: costs change, suppliers increase prices, inflation hits, and you need flexibility.
Watch outs: if customers have already purchased at an agreed price, you generally can’t retroactively change it. For subscriptions, consider notice and cancellation rights.
“We Reserve The Right To Update These Terms”
Why businesses use it: your business evolves, the law changes, and your terms need to keep up.
Watch outs: the big question is whether customers are bound by changes and how they are notified. If you want updates to apply to existing customers, you should be careful about notice and acceptance mechanisms.
“We Reserve The Right To Suspend Or Terminate Accounts”
Why businesses use it: to control platform misuse, protect other users, manage security incidents, and enforce payment terms.
Watch outs: customers may argue it’s unfair if there’s no clear trigger (e.g. breach of terms) or no process (e.g. warning, appeal, refund rules).
“We Reserve The Right To Use Alternative Suppliers Or Subcontractors”
Why businesses use it: to deliver services reliably even if you’re not personally available or your usual supplier can’t fulfil.
Watch outs: if the identity of the provider is critical (for example, specialised professional services), you may need consent or at least transparency. If subcontractors will access customer data, privacy and confidentiality protections matter.
Where you have contractors involved, it’s worth making sure your back-end documentation supports your customer promises, including a proper Contractor Agreement where appropriate.
Where “Reserve The Right” Shows Up In Business Documents (And What To Review)
This wording pops up across a lot of business documents, not just formal “contracts”. If you’re relying on it, it’s worth checking where it appears and whether the surrounding terms actually support it.
Customer-Facing Documents
- Website terms (including ecommerce terms, subscriptions, and user accounts)
- Quotes and proposals (especially if you later issue an invoice referencing terms)
- Service agreements (scope changes, milestones, delays, acceptance criteria)
- Refund, returns, and cancellation policies
Many businesses handle this through a tailored Service Agreement if they provide ongoing or higher-value services.
Employment Documents (Be Careful Here)
“Reserve the right” clauses can also appear in employment-related documents, for example around policies, workplace conduct, or changing duties. But employment relationships are heavily regulated in NZ, and employers generally can’t rely on a broad clause to unilaterally change fundamental terms like hours, pay, or key duties without proper process.
If you’re hiring staff, it’s safer to have clear foundations in your Employment Contract and align any “we reserve the right to update policies” wording with what you can actually lawfully change.
Privacy Documents
If you collect customer data (even something as simple as email addresses for newsletters), you need to comply with the Privacy Act 2020. “We reserve the right to use your information for…” should never be used as a substitute for proper privacy compliance.
Instead, be specific about what you collect and why, and keep your Privacy Policy up to date with your actual practices.
Key Takeaways
- The core “reserve the right” meaning is that you’re keeping a specific option or power available under the contract, but it doesn’t give you unlimited freedom.
- “Reserve the right” clauses work best when they’re specific, consistent with the rest of the agreement, and clearly communicated to the other party.
- In NZ, these clauses still need to comply with key laws like the Fair Trading Act 1986, the Consumer Guarantees Act 1993, and (for standard form consumer contracts) unfair contract term rules.
- Overly broad “we can change anything anytime” wording can backfire by creating uncertainty, unfairness concerns, and customer disputes.
- Practical protections like notice periods, defined reasons for change, and cancellation rights can make a “reserve the right” clause more enforceable and easier to use in the real world.
- These clauses often appear in everyday business documents like website terms, service agreements, and policies, so it’s important your documents match how your business actually operates.
If you’d like help drafting or reviewing contract terms (including “reserve the right” clauses) so they protect your business without creating avoidable risk, you can reach us at 0800 002 184 or team@sprintlaw.co.nz for a free, no-obligations chat.
