What “Notwithstanding” Clauses Really Do In NZ Contracts

If you’ve ever read a contract and felt your eyes stop at the phrase “notwithstanding anything else in this agreement”, you’re not alone.

A notwithstanding clause can look like harmless legal “padding”, but in practice it can completely change who carries risk, what gets paid, and which promises actually matter when something goes wrong.

For small businesses, this matters because you’re usually signing contracts that need to work in the real world: client agreements, supplier terms, contractor arrangements, shareholder arrangements, leases, and more. If a notwithstanding clause is drafted (or used) poorly, it can override the deal you thought you made.

Below, we’ll break down what a notwithstanding clause really does in a New Zealand context, when it’s useful, where it can backfire, and what to watch for before you sign.

What Is A Notwithstanding Clause (And Why Is It In My Contract)?

A notwithstanding clause is wording that tells the reader:

• “Even if other clauses say something different, this clause still applies.”

In other words, it’s a priority clause. It’s a shortcut for creating a “winner” if two parts of a contract clash.

You’ll often see it written like:

• “Notwithstanding clause 8, the Customer must pay…”
• “Notwithstanding anything else in this Agreement…”
• “Despite any other provision…”

The intent is usually practical: contracts get long, multiple people draft different parts, and sometimes two clauses don’t sit nicely together. A notwithstanding clause is one way to prevent an argument later about “which clause wins”.

That said, it’s important not to treat it as a magic wand. Whether it works (and how far it goes) depends on the exact words used and the wider contract structure.

Does “Notwithstanding” Make A Clause Unbreakable?

No. Using “notwithstanding” doesn’t make a clause automatically lawful or enforceable.

A contract still has to be enforceable in the first place, which generally requires a valid agreement, clear terms, and proper formation (among other things). If you’re unsure whether a contract is properly formed, it can help to sanity-check the basics of what makes a contract legally binding before you worry about “notwithstanding” wording.

Also, a notwithstanding clause can’t override New Zealand law. For example, some consumer rights can’t be contracted out of (and some business-to-business contracts can only contract out with strict compliance). A notwithstanding clause doesn’t change those rules.

When Do Small Businesses Actually Need A Notwithstanding Clause?

In a well-structured contract, you ideally minimise internal contradictions so you don’t need “override” language everywhere. But there are some common scenarios where a notwithstanding clause can be genuinely useful.

1) Setting Payment Terms That Override A General Dispute Clause

Many contracts include a general clause that says something like: “If there’s a dispute, the parties will try to resolve it and may suspend performance.”

But for service businesses, cashflow is critical. So you might want a clause stating that the client must still pay undisputed amounts even if they’re arguing about other parts of the invoice.

A notwithstanding clause can help make that priority clear (for example, “Notwithstanding the dispute resolution clause, the Customer must pay all undisputed amounts by the due date”).

2) Giving A Specific Document Priority Over General Terms

Small businesses often contract using a “package” of documents, like:

• Master agreement
• Statement of Work (SOW) / quote
• Service levels / schedule
• Special conditions

It’s common to set an “order of precedence” (which document wins if they conflict). A notwithstanding clause can support that structure, but it’s usually better practice to include a dedicated order of precedence clause rather than sprinkling “notwithstanding” language throughout.

This is particularly important if you use quotes and purchase orders. If your quote says one thing and the customer’s PO says another, you can end up with a battle of paperwork.

3) Carving Out Exceptions To A Limitation Of Liability

It’s common to see contracts that limit liability (for example, a cap on damages). Sometimes you’ll want exceptions, such as:

• Fraud
• Wilful misconduct
• Unpaid fees
• IP infringement

A notwithstanding clause is sometimes used to make the carve-out “win” over the general cap. This needs careful drafting, because limitation clauses are already sensitive and often heavily negotiated. If your contract includes a limitation clause, it’s worth understanding how limitation of liability works in practice before you agree to exceptions that quietly swallow the rule.

4) Keeping Key Obligations Alive After Termination

Many contracts end, but some obligations should continue-like confidentiality, payment obligations, restraint clauses (where enforceable), or returns of property.

Instead of relying on general wording, a notwithstanding clause can reinforce that those obligations survive. This often ties in with your termination provisions, which is why it’s important to be clear on terminating a contract and what should happen afterwards.

What Can Go Wrong With A Notwithstanding Clause?

A notwithstanding clause is powerful, but that’s exactly why it can cause problems-especially for small businesses where the contract might be the difference between a manageable dispute and a very expensive one.

1) It Can Accidentally Override The Commercial Deal

Sometimes the “business deal” is in the schedule, scope, or quote. Then a general “notwithstanding anything else” clause appears later (often in boilerplate), and suddenly the priorities flip.

For example:

• A schedule says you’ll be paid 50% upfront, 50% on delivery.
• Then a later clause says “Notwithstanding anything else, payment is due within 60 days of invoice.”

Which one applies? The notwithstanding clause may be argued to override the schedule, even if that’s not what either party intended.

2) “Notwithstanding Anything Else” Can Be Too Broad

When a clause says “notwithstanding anything else in this agreement”, it’s trying to override every single clause-including clauses the drafter may not have thought about.

That can create unintended outcomes, like cutting across:

• Notice requirements
• Variation / amendment clauses
• Dispute resolution steps
• Liability caps
• Refund rights

Broad override language can also make negotiation harder, because it signals “we want this to win against everything”, which often feels unreasonable to the other party (even if you only meant it to win against one or two clauses).

3) It Can Create Ambiguity (Yes, Really)

It sounds counterintuitive, but a notwithstanding clause can increase uncertainty if it’s not precise about what it overrides.

Example: “Notwithstanding anything else, the Supplier is not liable for any loss.”

Does that override an indemnity? Does it override a specific warranty? Does it override a clause saying the supplier will re-perform services at its cost? If it’s not clear, you could end up arguing about it later-exactly what the clause was meant to avoid.

4) It Can Clash With “Entire Agreement” And “No Reliance” Language

Many contracts include an “entire agreement” clause (saying the written contract contains the whole agreement). Some include “no reliance” statements (saying neither party relied on pre-contract statements).

If you add a broad notwithstanding clause that tries to preserve or exclude certain representations, you can end up with internally inconsistent wording. That creates risk because ambiguity tends to be resolved by interpretation rules, not by what you meant.

How Do NZ Courts Interpret Notwithstanding Clauses?

In New Zealand, contract interpretation generally focuses on what the words mean in context-not just the dictionary definition of “notwithstanding”. Courts will look at the contract as a whole and the commercial purpose behind it.

So, while a notwithstanding clause is a strong signal that one clause should take priority, it’s not always the end of the analysis.

Key Practical Points (In Plain English)

• Context matters: The same phrase can be interpreted differently depending on the rest of the contract.
• Specific beats general: If you have a specific clause tailored to a scenario, it may be preferred over a broad, general clause-unless the contract clearly says otherwise.
• Commercial common sense: Courts try to avoid interpretations that produce commercially absurd outcomes.
• Clear drafting wins: If you want a clause to override another clause, naming it clearly (by clause number or subject) reduces the room for argument.

NZ contract law comes from a mix of legislation (including the Contract and Commercial Law Act 2017) and judge-made law (case law). While interpretation principles are heavily shaped by court decisions, your day-to-day takeaway as a business owner is straightforward: the clearer your contract is, the less you’ll rely on a court to “figure it out” later.

How To Draft (Or Negotiate) A Notwithstanding Clause Without Shooting Yourself In The Foot

If you’re using a notwithstanding clause in your own contracts, or you’re negotiating someone else’s, these are the practical steps that help protect your business.

1) Be Specific About What You’re Overriding

Instead of:

• “Notwithstanding anything else in this Agreement…”

Try something closer to:

• “Notwithstanding clause 12 (Limitation of Liability)…”
• “Notwithstanding any payment timing in clause 6…”

This keeps the override targeted and reduces “surprise” consequences elsewhere in the agreement.

2) Use An Order Of Precedence Clause For Multi-Document Deals

If your agreement includes schedules, SOWs, purchase orders, or special conditions, it’s often cleaner to include an “order of precedence” clause that sets out a hierarchy.

This is usually more readable than repeating notwithstanding clauses throughout the agreement, and it helps future-proof the relationship when new SOWs are added later.

3) Double-Check The Clause Against Your Risk Clauses

Before you accept a notwithstanding clause, check how it interacts with these common risk-management clauses:

• Limitation of liability: does the notwithstanding clause quietly remove your cap?
• Indemnities: does it expand (or wipe out) an indemnity clause?
• Payment and set-off: does it allow the other party to withhold payment?
• Warranties: does it override a warranty you were relying on?
• Termination rights: does it change when you can exit?

This is a common spot where contracts become one-sided without looking one-sided at first glance.

4) Make Sure It Doesn’t Conflict With Your Variation Clause

Most contracts say changes must be in writing and signed (a variation clause). If a notwithstanding clause effectively lets one party change key terms “despite anything else”, you could be accepting an informal variation right without meaning to.

That’s particularly important when you’re running a growing business and your service offering changes over time.

5) Don’t Use “Notwithstanding” As A Substitute For Good Structure

It can be tempting to fix a messy contract by adding a “notwithstanding anything else” clause at the top. But if you have multiple inconsistencies, that approach can create more disputes, not fewer.

Usually, the better approach is to restructure the agreement, align definitions, and remove the contradictions. This is exactly the kind of issue that comes up in a Contract Review, because you’re not just checking whether a clause exists-you’re checking how the clauses work together as a system.

6) Think About The Relationship You’re Building

Small business contracts aren’t just about “winning” a worst-case scenario. They’re also about having a workable relationship where both sides know what to do next.

If your contract is loaded with override wording, it can create distrust and slow down negotiations. Clear, balanced drafting often helps you close deals faster-without giving away protections you actually need.

Common Examples Of Notwithstanding Clauses (And What To Watch For)

Here are a few common “real life” examples and what they usually mean in practice. These aren’t one-size-fits-all, but they’ll help you spot the risk.

Example 1: “Notwithstanding Anything Else, All Fees Are Non-Refundable”

This is often used by service providers who don’t want customers cancelling after work has started.

What to watch for:

• If you sell to consumers, consumer law may limit how far “no refunds” language can go, and misleading refund statements can raise issues under the Fair Trading Act 1986.
• If you’re the customer, you may want at least a pro-rata refund or a termination fee model instead of “no refunds ever”.

Example 2: “Notwithstanding Clause X, Liability Is Unlimited For Confidentiality Breaches”

This is a common carve-out, but it can be extremely high risk (especially if “confidential information” is defined broadly).

What to watch for:

• Does “confidential information” include anything you receive, even if it’s public or already known?
• Is the carve-out limited to direct losses, or does it include indirect/consequential loss?
• Is there a reasonable time limit on confidentiality obligations?

Example 3: “Notwithstanding Anything Else, The Supplier May Change These Terms At Any Time”

This is one of the biggest red flags, particularly in online terms or subscription arrangements.

What to watch for:

• Is there a notice period?
• Can you terminate if you don’t accept the change?
• Does the change apply immediately to existing orders or only future orders?

If you rely on online terms, it also helps to be clear about the difference between a deed and a standard agreement (and how formalities can affect enforcement). If you’re deciding between document types for a particular arrangement, understanding the difference between deed and agreement can be useful.

Example 4: “Notwithstanding Anything Else, The Customer Must Pay Legal Costs On Demand”

Cost recovery clauses can be legitimate, but “on demand” and “notwithstanding anything else” can make them feel punitive.

What to watch for:

• Does it apply only if the customer is in default, or even if there’s a genuine dispute?
• Does it include debt collection costs, solicitor-client costs, or “all costs whatsoever”?

Key Takeaways

• A notwithstanding clause is an “override” clause that can give one term priority over other parts of the contract.
• They’re useful for resolving conflicts between clauses, setting clear exceptions, and managing multi-document deals (like SOWs and schedules).
• Broad wording like “notwithstanding anything else” can be risky because it may override more of the contract than you intend (or more than you notice when signing).
• NZ contract interpretation looks at the clause in context, so clear drafting and a coherent structure matter just as much as the word “notwithstanding”.
• Always check how a notwithstanding clause interacts with your “risk clauses” like liability caps, termination rights, confidentiality, and indemnities.
• If you’re unsure, getting a contract checked early is usually much cheaper than dealing with a dispute later.

If you’d like help reviewing or drafting contracts with a notwithstanding clause (or negotiating one you’ve been presented with), you can reach Sprintlaw at 0800 002 184 or team@sprintlaw.co.nz for a free, no-obligations chat.