3PL Contract Guide: What to Include Before You Sign

The quote tells you the pick fee. The contract decides whether that fee can change mid-term, what the 3PL owes you when it misses a ship date, and whether you can take your inventory with you when you leave. Those terms are far easier to change before you sign than after.

This guide is for brands with a 3PL's draft agreement in hand. Earlier in the process? Start with what a 3PL is, use our questions to ask on first calls and our RFP template to collect quotes you can compare, and build a longlist from our top 3PLs. Below: the nine areas a 3PL contract should cover, the red flags to catch, what to ask for, and a checklist and term sheet for your lawyer.

What a 3PL (fulfillment) agreement covers

A 3PL agreement often arrives as a main contract plus schedules: a fee schedule or rate card, a service level agreement, and sometimes a statement of work or operating procedures. Read them as one document, because a promise in one can be limited in another. Whatever the format, it should settle nine things.

Then find the order-of-precedence clause in the boilerplate. It says which document wins when the main contract and a schedule disagree.

3PL contract clauses, one by one

Scope of services

The scope is the list of work the 3PL has agreed to do. Anything outside it can be quoted later as extra work, so a thin scope is where surprise charges begin. A complete one names:

• Receiving: how your inbound stock arrives (parcel, pallet or container), what a standard receipt looks like, and what happens to a shipment that arrives without paperwork.
• Storage: the type of space (shelf, bin, pallet, climate controlled) and how it is measured.
• Order fulfillment: which order types it covers, such as direct to consumer, wholesale or marketplace orders, and whose packaging it uses.
• Returns: what the 3PL does with a return: inspect, restock, refurbish or dispose, and how it reports each one to you.
• Kitting and special projects: bundles, inserts, relabeling, and how a new project is quoted.
• Systems: the store, marketplace and carrier connections the 3PL will set up and maintain.

Ask for one more sentence: new work starts only after a written quote you approve.

Pricing and fees

The fee schedule should be attached to the contract and name every charge that can appear on an invoice, each with its unit (per order, per item, per pallet, per hour) and what triggers it. Expect lines for receiving, storage, pick and pack, packaging, returns, kitting, accessorial charges and peak season surcharges.

Then settle who owns the carrier rates. If the 3PL ships on its own carrier accounts, the contract should say how it bills you for postage: at its cost, at its cost plus a stated markup, or at a rate card it sets. If you ship on your own accounts, it should say what the 3PL charges to use them. Finally, find the clause that says how and when any rate can change, and how much notice you get.

For typical rates and where fees hide, see our 3PL pricing guide. If you want to see the 3PL's own costs behind each rate, ask about an open-book contract.

SLAs and KPIs

The service level agreement turns the 3PL's sales promises into commitments. For each metric, the contract should state the target, how it is measured (from which timestamp, over what period, in whose system), how it is reported to you, and what you get when it is missed. Metrics worth writing in:

• Dock to stock: how soon received inventory is available to sell.
• Ship time: the daily order cutoff, and the share of orders received by it that ship the same or the next business day.
• Order accuracy: the right items, in the right quantity, to the right address.
• Inventory accuracy: how closely the system count matches the shelf, checked by cycle counts.
• Returns processing: how soon a return is inspected and back in stock or reported.
• Response time: how quickly the 3PL answers your team's tickets and escalations.

Remedies make the targets mean something: service credits on the next invoice, a written corrective plan after repeated misses, and the right to leave if misses continue (see term and termination). Read the exclusions too. An SLA that is suspended during peak, after a late inbound shipment or "for reasons beyond our control" should list those cases, not leave them open.

Liability and insurance

This clause decides what you recover when stock is lost, damaged or stolen in the warehouse. Under UCC § 7-⁠204, a warehouse is liable for loss or damage caused by its failure to take reasonable care of your goods, and the storage agreement can cap that amount. The same section lets you ask in writing, when you sign, for a higher limit on some or all of your goods, and lets the warehouse charge more for it. States adopt the UCC with their own changes, and the version enacted by the state whose law governs your agreement is the one that controls.

Read the cap closely: how it is calculated (per item, per pound or per incident), what value a lost item is paid at, and how long you have to file a claim and with what proof. Some agreements also allow a level of shrinkage before the 3PL pays anything; if yours does, check how it is measured and over what period.

• Indemnity should run both ways: the 3PL covers losses caused by its negligence or breach, and you cover losses caused by your products.
• Insurance: ask which policies the 3PL carries for goods in its care, then set what your own policy must cover, since your inventory may be worth more than the 3PL's cap.
• In transit: once a package leaves the dock, the carrier's liability limits usually apply, unless your agreement keeps the 3PL responsible in transit. Cargo insurance is how brands cover the gap.

Term, renewal and termination

Settle these before you sign; each one is harder to change later.

• Initial term: how long you are committed, and whether an onboarding period comes before any monthly minimum applies.
• Auto-renewal: whether the contract renews itself, and for how long each time.
• Notice: how notice to leave or not renew must be given (in writing, to whom, by what date).
• Termination for cause: what counts as a material breach, and how long the other side has to fix it.
• Termination for missed SLAs: the right to leave without an early-exit fee after repeated misses you have documented.
• Exit transition: what the 3PL must keep doing while you leave: ship orders, release inventory and hand over records.

Inventory and lien

The contract should state that you keep title to your inventory: the 3PL holds it for you and cannot use it as its own. It should also set how stock is counted (cycle counts, a periodic full count) and let you request or attend a count.

Under UCC § 7-⁠209, a warehouse has a lien on goods in its possession for unpaid storage, transportation, labor and related charges. Check whether the agreement claims a lien for charges on all your goods; § 7-⁠209 allows that only if the warehouse receipt or storage agreement says so. If the charges stay unpaid, UCC § 7-⁠210 lets the warehouse sell the goods to satisfy the lien, after notifying you and anyone else known to claim an interest in them. The lien is why the final invoice matters if you ever move; our guide on switching 3PLs covers planning for it.

Data ownership and export

Your order, inventory, returns and shipment records should belong to you by contract. Look for the right to export them at any time and at exit, in a documented format your next system can import, at no charge or a stated one. Also check that the 3PL may use your data only to serve you, that it must tell you promptly about a security breach, and who owns any custom integration built for your account.

Confidentiality

The duty should be mutual: your pricing, product plans and sales data stay private, and so does the 3PL's rate card. Check that it covers your customers' personal data, how long it lasts after the contract ends, and whether the 3PL may name you as a client or show your logo.

Disputes and governing law

The contract names which state's law governs it, where disputes are heard, and the route there: talks between named contacts first, then mediation, arbitration or court. A clause that sends every dispute to a court near the 3PL raises your cost of enforcing anything. Also look for a rule for the meantime: you pay the undisputed part of an invoice, and the 3PL keeps shipping while the rest is resolved.

3PL contract red flags

Each of these is a sign that a clause above protects the 3PL and leaves you exposed.

• Service levels with no remedy, or no stated way to measure them. A missed target costs the 3PL nothing, and you cannot show it happened (SLAs and KPIs).
• Auto-renewal with an easy-to-miss notice window. One missed date commits you to another full term (term and renewal).
• Fees the 3PL can change by notice alone. Your cost per order can rise mid-term with nothing to negotiate (pricing and fees).
• A small fixed liability amount per unit or per pound, and no claims process. A lost pallet is paid at a fraction of what it cost you, if at all (liability).
• Indemnity that only you give. You cover claims your products cause, and nothing makes the 3PL cover claims its own errors cause (liability).
• A right to hold all your stock for charges on any goods. One disputed invoice can freeze your whole inventory (inventory and lien).
• No right to audit invoices or count inventory. You cannot check what you are billed or what is on the shelf (inventory).
• Data export only in the 3PL's own format, or for a fee. Leaving means rebuilding your order and stock history by hand (data).
• Nothing on what happens while you leave. The 3PL has no duty to keep shipping or to release stock on a schedule during the move (termination).

What to push for

These asks answer the red flags. Raise them with your lawyer, who can word them to fit the rest of the agreement.

• A performance exit. The right to end the agreement early, with no early-termination fee, after repeated documented SLA misses that the 3PL has had a fair chance to fix.
• A complete fee schedule. Every billable charge listed with its unit, and no new charge without your written approval.
• Invoice-audit rights. Line-item invoices you can tie to order and receiving records, a window to dispute a charge, and the right to pay the undisputed part while a dispute is open.
• Inventory-count rights. Scheduled cycle counts, the right to request or attend a count, and a written reconciliation when counts differ.
• A lien limited to the goods the unpaid charges relate to, rather than one over everything you store.
• A higher liability limit, if you need one. If your products are worth more than the cap, ask for a higher limit in writing at signing, as § 7-⁠204 allows, and price the higher rate.
• An exit transition. A wind-down period in which the 3PL keeps shipping, releases inventory once undisputed charges are paid, and works with the provider receiving it.
• Data export on request. Your records in a documented format, at any time and at exit, at no charge or a stated one.

Download the 3PL contract template (checklist and term sheet)

One file, two parts. Part 1 is a checklist: 33 yes-or-no questions in nine sections that match the clauses above, with room to note the clause number. Every No is a point to raise. Part 2 is a term sheet: one page to record what you and the 3PL agree, from the parties and dates to the exit terms, so your lawyer can check the final contract against it.

3PL contract FAQ

What is a 3PL agreement?

A 3PL agreement is the contract between a brand and a third-party logistics provider. It sets the services, the fees, the service levels, who is liable for your inventory, the term, and how either side can end it. "3PL contract" and "fulfillment agreement" usually mean the same thing.

What should a 3PL contract include?

Nine areas: scope of services, pricing and fees, SLAs and KPIs, liability and insurance, term and termination, inventory and lien, data ownership and export, confidentiality, and disputes and governing law. Our checklist turns each one into yes-or-no questions.

What is a 3PL service level agreement?

It is the part of a 3PL contract that sets measurable targets, such as ship time, order accuracy and dock to stock, with how each is measured and what the 3PL owes you when it misses one.

Is there a 3PL contract template or example?

Yes: our free checklist and term sheet, linked to the download section. It's a review aid, not a contract to sign. Have a lawyer draft or review the final agreement.

Can a 3PL hold my inventory if I leave?

It may, if charges are unpaid. Under UCC § 7-⁠209, a warehouse has a lien on goods it holds for unpaid storage, transportation, labor and related charges on those goods. It can hold them for charges on your other goods only if your agreement says so. Ask a lawyer.

What termination terms should it include?

Termination for cause with time to fix a breach, the right to leave after repeated SLA misses, a clear notice date if the contract renews itself, and exit terms for your inventory and data. When you are ready to move, see how to switch 3PLs.

Next step

Read the 3PL's draft with the checklist beside it, fill in the term sheet as you negotiate, and send both to your lawyer with the draft. If you are still choosing a provider, find a 3PL that fits your volume and channels first.

Have a quote already? Compare it with matched 3PLs before you sign.

How we wrote this: the legal points follow the text of Article 7 of the Uniform Commercial Code (§§ 7-⁠204, 7-⁠209 and 7-⁠210) as published by Cornell Law School's Legal Information Institute, read October 23, 2026. Each state enacts the UCC as its own law, sometimes with changes, so ask your lawyer how the governing state's version applies to your agreement.