Your rights to change or cancel a contract or quote, and how to get a refund on your deposit and for breach of contract.

You can cancel only in certain situations

Generally, once you make a contract or accept a quote, you can’t change or cancel it. To do so without agreement, would be breaking the contract (also called breach of contract). The exception is if the contract or quote:

  • has a termination clause with the right to cancel in certain circumstances
  • has a variation clause – but note that sometimes only the supplier has the right to vary the contract.

The other party may, however, agree to your change or cancellation. This may happen if they have another customer waiting for the same products or services. You may have to pay a cancellation fee.

If the contract doesn’t contain a detailed cancellation clause, you’ll have to rely on the law of contract to establish whether you’re entitled to cancel. Reasons include:

  • mistake
  • misrepresentation – where you are given the wrong information
  • duress – being forced into signing a contract
  • incapacity – when forming a contract, eg you are a minor
  • specific types of contracts – layby, door-to-door, credit sales, or products and services that you didn’t ask for; these all allow for cooling-off periods where you can change your mind initially within a set period, or cancel if you are not given full and correct information.

See also:

Deposit is generally not refundable

Generally a deposit is not refundable. There are three exceptions:

  • the supplier fails to meet their side of the contract, eg they can’t supply the products you ordered
  • both parties agree that the deposit is refundable in full or in part
  • you cancel products bought on layby.

Know your rights

You have the right to cancel or vary a contract in some situations when things go wrong. Your rights depend on what went wrong and how serious it was, including:

  • the contract itself and your situation, eg was it for consumer or commercial products?
  • specific consumer laws that may apply to your situation, regardless of what the contract says, eg credit contracts and the Credit Contracts and Consumer Finance Act
  • general laws dealing with cancellation, such as the Contract and Commerical Law Act when one or both parties have made a mistake
  • contract law made by judges (common law rules).

Tip: Even if you’re entitled to cancel a contract, you don’t have to do so.

Also be careful not to unintentionally affirm by your behaviour or agreement. This is where you still continue with the contract even when you know about a breach of contract by the other party. You lose your right to cancel the contract for any previous breach.

Be careful about cancelling a contract without getting good advice first, as you may be in breach of contract.

Specific consumer laws

The Consumer Guarantees Act covers remedies that a business must provide you with, including cancellation and refunds, if there is a problem with its consumer products and services.

See also:

Other specific consumer laws that deal with your rights to vary or cancel a contract include:

  • the Fair Trading Act – layby sales, door-to-door sales, unfair sales practices, products that you didn’t ask for, unfair and misleading conduct or advertising
  • the Credit Contracts and Consumer Finance Act – consumer credit contracts
  • the Contract and Commercial Law Act – warranties for commercial products and for private sales, the rules for cancelling a contract for breach or misrepresentation, and other remedies such as compensation, and the rules protecting young people under 18 years of age making contracts, including which contracts are enforceable. 

See also:

Cancelling because of a mistake

You can apply to court if you or the other party to a contract or both of you made a genuine mistake about an important term under the Contract and Commercial Law Act.

Contract law

For all contracts for products or services where the Consumer Guarantees Act (CGA) doesn’t apply, you’ll have to rely on the terms of the contract and general contract law if you wish to cancel the contract.

There are two main reasons why a contract may be cancelled under the Contract and Commercial Law Act (CCLA). These are:

  • misrepresentation: the trader gave you incorrect information about an essential part of the contract
  • breach of contract: an important term or condition of the contract has been broken.

If you decide to cancel a contract for a serious misrepresentation or breach, you must tell the trader why. Then you don’t have to do anything else under the contract.

The CCLA can be used to cancel private sales for products and services or commercial services sold by a business. You can claim compensation based on the difference between what you paid and what the value would be if the statement had been true. A trader can contract out of the CCLA so that it does not apply, but only if it is fair and reasonable to do so.

Cancelling because of natural disasters or other external events

Some agreements may have a force majeure clause in them. This clause excludes or limits a business’s responsibility if a service is or will be affected by some external event. Usually both parties don’t have to do anything further and the contract ends. You’ll also be able to get a refund if you have paid in advance.

Force majeure events beyond human control that prevent service providers from meeting the CGA guarantees of timely performance or fitness for a particular purpose have a similar effect for consumer services contracts.

Lastly, a business may argue that the contract is frustrated, so it doesn’t have to provide the service under the Contract and Commercial Law Act. A contract is frustrated where it is impossible to carry out the contract or it becomes significantly different to what you agreed to. You don’t have to pay anything. If you have paid already, you get a refund.

Read Overcharging or incomplete work to find out more.

Other reasons to cancel or change a contract

Harsh or oppressive contracts: Either a term in the contract or the way another party is carrying out the contract can be harsh or oppressive. That can be grounds to for you to apply for a contract to be varied or cancelled. If your credit contract is oppressive, you may also have rights under the Credit Contracts and Consumer Finance Act 2003.

Read Cancelling your credit contract to find out more.

Unfair contract terms: If a standard form contract entered into after 17 March 2015 has terms in it that are unfair, you can ask the Commerce Commission to apply to court to have them changed or deleted.

Read Standard form contracts.

If things go wrong

Contact the other party to the contract

Go back to the trader first to sort out the problem first if you have a contractual dispute.

See also:

Next steps

If you are unable to resolve your issue directly with the retailer, manufacturer or service provider, our Resolve It tool has information to help you take the next steps. These may include going to the Disputes Tribunal or District Court.

Resolve it: Contracts

Need more help?

Contact us for more guidance.

Common situations

Serious breach and cancellation for consumer services

Kiri asks a roofer to replace her roof and supply the materials. The new roof leaks badly after a week of heavy rain and Kiri is told the work will have to be completely redone. Kiri cancels the contract as this is a serious breach of contract, and does not pay the roofer for his services. She will still have to pay the roofer for the materials supplied as they are not faulty.

Misrepresentation by a business

Before purchasing some hops, Joe, a farmer, asks the trader if a certain ingredient has been used in cultivating the hops. He makes it clear that if it has, he is not interested in buying. The trader assures Joe that the certain ingredient was not used. However, Joe later discovers that the ingredient was used. Joe can cancel the contract as the requirement that the certain ingredient not be included in the grain was a serious misrepresentation under the Contract and Consumer Law Act.

Breach of contract

Steve contracts with a builder to build a garage on his property and they agree the work is to start in two weeks. The builder contacts Steve two days before the start date to say they have to complete several other contracts first and there will be a two-week delay. Steve may be able to cancel the contract if this deadline is important to him as a serious breach under the Consumer Guarantees Act.