A stock-count service contract: clauses worth checking

A contract is not a paper that gets signed and put on a shelf. It is the document you return to when a disagreement arises. For a stock-count service this matters especially: the product of the work is a report, and a report can be argued about later. Below are the main clauses to look over before signing. This is not legal advice: the exact wording of each clause and its compliance with the law should be checked with the company's lawyer and accountant. Before the contract reaches the lawyer, the warehouse manager should read it too: those are the people who carry out its clauses in practice.

Subject and scope of work

Most disputes come from the question "what exactly was to be counted?". The contract should state:

• which sites (addresses, warehouses, branches) and which kinds of assets: stock, fixed assets or both;
• the approximate number of items and the unit in which they are counted;
• what is excluded from the count: locked rooms, goods in transit, material belonging to another organisation;
• the counting method: full or sample-based;
• the form in which the result is delivered: a spreadsheet file or a printed copy;
• what happens if the actual volume exceeds the estimate.

A hypothetical example: the contract says "warehouse inventory" but does not name the warehouses. The contractor counts the main warehouse, while the client also expected the branch warehouses. Both sides think they are right, because the wording can be read two ways. Naming every address prevents such arguments.

Timing and the cut-off date

Write these dates down separately:

• the start and end of the work;
• the date and time of the cut-off;
• the deadline for delivering the report;
• the period during which the client may raise objections.

An important question: what happens if the schedule slips through someone's fault? A hypothetical situation: the contractor's team arrives at the agreed hour and the warehouse stays closed for two hours. If the contract says nothing about it, a dispute begins over who waits, who pays and whether the deadline moves. If access, the supply of the list and the assignment of staff are written as the client's obligations, such situations arise less often.

Duties of the parties

• The client provides access to the site, supplies the list of balances, involves the accountable person and a warehouse employee in the count, and answers questions on time.
• The contractor sends a team of the agreed size, equips it, counts by the agreed method and delivers the result.
• The responsible representatives of both sides are named with their contact details, so on count day nobody asks "whom do we ask?".
• If the volume, date or place changes, the change is confirmed in writing, as a supplementary agreement or as correspondence both sides have confirmed. A verbal arrangement is hard to prove later.

Results and acceptance

State what the report consists of (totals, a list of differences, notes), by which date it is delivered and how long the client has to object. A separate clause is needed for the re-check procedure: if the client considers a difference to be an "error", which items are recounted, when, and at whose cost. Agreed in advance, a dispute is settled in days; otherwise it drags on for weeks. Ask the lawyer which document should record delivery and acceptance of the result.

Confidentiality, liability and payment

The confidentiality clause should say what it covers (balances, prices, customer lists), how long it lasts and whether data is returned or deleted when the work ends. It helps if the contract also says that the contractor's staff observe confidentiality and have been told of the obligation. The liability clause should show the limits within which each party answers for an error or loss, and how the work is redone. The payment clause covers whether there is an advance, when the final payment falls due and how the price changes if the volume does. Read the early-termination terms as well: how the completed part is settled if the work stops halfway. For the precise wording of these clauses and the tax aspects, consult a lawyer and an accountant.

Conclusion

A good contract settles the scope of work, the timing, the duties of the parties and the way results are accepted in advance. At Inventory too, work begins with the price, timing and confidentiality terms being set out in a contract, and a non-disclosure agreement (NDA) is signed with every client.