Most payment disputes between tradies and clients come down to one thing: no clear written agreement. The client thought it included X. The tradie thought X was extra. Both parties feel wronged, and without a contract, neither has a definitive answer.
A written contract protects you from this. Here's how to write one that works.
Quote vs Estimate vs Contract — What's the Difference?
These three words get used interchangeably, but they mean different things legally.
A quote is a fixed price offer. If the client accepts it, you're committed to delivering the work at that price (subject to any variation provisions). Quotes are binding once accepted.
An estimate is an approximate price. It's not binding — the final invoice might come in higher or lower based on actual costs. Estimates are appropriate when scope genuinely can't be determined upfront (e.g., after opening a wall to find unexpected damage). Be careful: if your estimate is close enough to a quote in the client's mind, courts may treat it as a binding price.
A contract is the full agreement — usually your accepted quote plus terms of trade, or a separate written document. It sets out scope, price, timeline, payment terms, variation process, and what happens when things go wrong.
For any job above $10,000, you want a written contract. For jobs under that, at minimum a written quote with your payment terms clearly stated.
What Every Tradie Contract Should Include
A contract doesn't have to be a 20-page legal document. A clear, plain-language agreement covering these points is enforceable:
Scope of Work
Be specific. "Renovate bathroom" is not a scope. "Supply and install new shower, vanity, and toilet as per attached specification; tile floor and walls to 2m height; replace existing plumbing fittings" is a scope.
Vague scope is the number-one cause of disputes. Every item that isn't explicitly in the scope is an extra — document it before someone assumes it's included.
Price and Payment Terms
State the price (excl. GST if applicable), GST amount, and total. Include: - Deposit required (common: 20–50% for material-heavy jobs) - Progress payment schedule (for larger jobs) - Final payment timing (e.g., within 7 days of practical completion) - Your bank account details for payment
Variations Process
This is crucial. When the client asks you to change, add to, or remove something from the scope, that's a variation — and it needs written approval before you do the work. Include a clause that says something like:
"Any variations to the agreed scope must be submitted in writing using a Variation Order and approved by the client before work commences. Verbal instructions to vary the scope may be charged at the contractor's standard rates."
Our free Variation Order Template gives you the format to document these properly.
Timeline
State expected start and completion dates, and note any conditions (e.g., "subject to weather," "dependent on council consent timing," "subject to material availability").
Protect yourself with a clause noting that delays outside your control (weather, consent delays, other trade delays) extend the completion date accordingly.
Dispute Resolution
Reference the Construction Contracts Act 2002 for construction work (see below) and include a process: raise in writing → attempt resolution → adjudication or Disputes Tribunal if unresolved.
The Construction Contracts Act 2002 — It Applies Whether You Want It To
For construction work in New Zealand, the Construction Contracts Act 2002 (CCA) applies automatically. You can't opt out.
The CCA covers: - Building, repair, maintenance, alteration, demolition - Electrical and plumbing work (and other trade services to a structure) - Landscaping, excavation, site preparation
Under the CCA: - Payment claims must be in a specific format — the payer has 20 working days to issue a payment schedule - Retention money must be held on trust and returned at the end of the defect liability period - Shoddy contracts can't override the Act — provisions that would remove these rights are void - Adjudication is available as a fast, relatively cheap dispute resolution mechanism (weeks, not months)
The practical implication: if you do construction work, your invoices are payment claims under the CCA by default. The client's obligation to respond (or pay) is triggered on receipt. Make sure your contracts and invoices reference this — it gives you legal standing to recover unpaid amounts faster.
Our CCA Payment Claim Template is formatted for exactly this purpose.
Written vs Verbal Contracts
Both are legally valid in New Zealand. If a client verbally agrees to your quote, a contract exists. The problem is proving what was agreed when the dispute hits.
Emails and texts create written evidence. An accepted quote sent by email and acknowledged by reply creates a written record. A signed quote is even better.
The only time verbal contracts reliably survive disputes is when both parties remember the same thing and there are no stakes high enough to fight over. That's rare on any job over a few thousand dollars.
Rule of thumb: if the job is worth fighting over, get it in writing.
When to Get Legal Review
Most residential tradie jobs don't need a lawyer. A clear quote + payment terms + your Terms of Trade covers the basics.
Get a legal review when: - Contract value exceeds $100,000 - The contract is provided by the client (not you) — read everything, especially default, indemnity, and liability clauses - There are unusual risk allocations (e.g., you're responsible for delays caused by others) - You're entering a long-term maintenance or service contract
Our free Terms of Trade template covers the essentials for everyday jobs. For complex commercial work, spend $300–$500 on a one-hour legal review — it's cheap insurance.
Key Takeaways
- A written contract prevents most disputes by removing ambiguity
- Always distinguish between quotes (binding) and estimates (indicative)
- Include scope, price, payment terms, variation process, and timeline as minimum
- The Construction Contracts Act 2002 applies automatically to all construction work in NZ
- Get variations in writing before doing extra work — not after
- Verbal contracts are valid but nearly impossible to enforce when facts are disputed
Download our free Terms of Trade template and Variation Order template — both are ready to fill in and download as PDF.
NZ Tradie Tools provides free calculators, templates, and guides for New Zealand tradies. This article is general information only — for complex contracts or specific legal situations, seek advice from a construction lawyer.