A 3PL contract is the agreement that sets what your fulfillment partner must deliver, what it charges, and who pays when something goes wrong. Most brands read the price schedule closely and skim the rest. The rest is where the expensive surprises live: who covers lost inventory, what happens when accuracy slips, and how hard it is to leave.
Use this checklist when reviewing any fulfillment agreement. It is not legal advice, so have a lawyer review the final document, but it will help you ask the right questions before you get there.
1. Service level agreements (SLAs)
An SLA turns promises into measurable commitments. If a provider will not put a number in writing, assume it will not be met. The table below lists the core SLAs to request and common industry benchmarks.
| SLA | What to ask for | Common benchmark |
|---|---|---|
| Order accuracy | Percentage of orders shipped with correct items and quantities | 99.5% or higher |
| Dispatch time | Orders received by a cut-off time leave the same or next business day | Same or next day |
| Receiving time | Time from inbound arrival to stock available for sale | 24 to 48 hours |
| Inventory accuracy | Match between system counts and physical cycle counts | 99% or higher |
| Support response | Time to first reply on order issues | Within one business day |
The accuracy and receiving benchmarks above are drawn from Red Stag Fulfillment’s guidance on 3PL standards, which describes 99.5%+ accuracy with financial penalties per error as standard among top providers.
2. What happens when an SLA is missed
An SLA without a remedy is just a target. Check whether the contract includes:
- Credits or refunds for each mis-shipped order, including the cost of reshipping
- A defined process and deadline for raising claims
- The right to terminate without penalty if SLAs are missed for a set number of consecutive months
Want terms you can test before you commit? Fulfillmen works month to month, with no minimums and no lock-in contract.
3. Liability for lost or damaged inventory
This is the clause brands most often regret not reading. Many standard contracts cap the warehouse’s liability at a low amount per pound or per unit, far below what your products are worth.
- Valuation basis: are losses reimbursed at your cost price, retail price or a fixed cap?
- Shrinkage allowance: some contracts allow a percentage of inventory loss before any payment. Push for zero.
- Insurance: does the provider carry warehouse insurance, and does it cover your goods? You may need your own policy.
- Carrier damage: who files and pays claims for parcels damaged in transit?
4. Fees and price changes
The price schedule should be complete. Compare it with independent benchmarks: Fulfill.com’s 2026 data shows US account management fees from $30 to over $1,000 a month and monthly minimums averaging $517. Then confirm:
- Every fee is listed, including receiving, storage, kitting, returns, account and integration fees
- How much notice the provider must give before raising rates
- How carrier surcharges, such as peak season and fuel, are passed through
- Whether minimums apply, and how they are calculated
Value-added work such as kitting, inserts and relabelling is often priced separately. Our breakdown of 3PL value-added services shows which extras are worth paying for.
5. Term, renewal and exit
- Initial term: 12 months or longer is common at traditional 3PLs. Month-to-month is better for a first partnership.
- Auto-renewal: check the window for cancelling before a renewal locks you in.
- Termination fees: early exit charges and any remaining minimums.
- Inventory release: how quickly your stock will be released on exit, and at what cost.
- Lien clauses: some contracts let the warehouse hold your inventory against unpaid invoices. Understand the conditions.
6. Data, systems and reporting
Confirm that you own your order and inventory data, that you get real-time access to stock levels, and that integrations with your store are included. Ask what reports you will receive and how often.
Questions to ask before you sign
Send these in writing and keep the answers with your contract. Vague replies are a signal in themselves.
| Question | What a good answer looks like |
|---|---|
| What happens if you mis-ship an order? | A credit per error plus free reshipping, defined in the contract |
| How is lost stock valued? | At your landed cost, with no shrinkage allowance |
| How much notice before a price rise? | At least 30 days in writing |
| What does it cost to leave? | No termination fee on a month-to-month term, and a stated release fee per unit |
| Who pays for carrier damage? | A named process, with the provider filing claims on your behalf |
| Can I see my stock in real time? | Yes, through a portal or live sync to your store |
How to negotiate a better 3PL contract
Most 3PL contracts are more flexible than they look, especially for a brand with clear data and realistic forecasts. Focus on the clauses that cost the most when things go wrong, not just on the rate card.
- Bring your numbers: monthly orders, units per order, product sizes and destinations. Providers price risk, and good data lowers it.
- Trade term for flexibility: if you accept a longer term, ask for a lower or waived minimum, or a fixed price for the first year.
- Raise the liability cap: ask for losses to be valued at your landed cost rather than a cap per pound.
- Remove the shrinkage allowance: an accurate warehouse should not need permission to lose a percentage of your stock.
- Add a performance exit: the right to leave without penalty if accuracy or dispatch SLAs are missed for two or three consecutive months.
- Cap price increases: a notice period of at least 30 days and a limit on how often rates can change.
Get every concession written into the contract or a signed addendum. A promise made on a sales call is not a term, and the person who made it may not be there when you need it honoured.
Red flags to walk away from
- No written SLAs, or SLAs with no remedies
- Liability capped at a token amount with no option to increase it
- Rates that can change “at any time” without notice
- Long auto-renewing terms with heavy exit fees for a first contract
- Vague answers on who pays for carrier damage or customs issues
Comparing contracts right now? Send us the terms you have been offered and we will show you how ours compare, line by line.
How Fulfillmen approaches contracts
Fulfillmen works without lock-in contracts, minimum order quantities or monthly commitments. You pay for units dispatched, each item is checked against your product specification during pick and pack, new stock gets 90 days of free storage, and Shopify, WooCommerce and Amazon integrations are free. That lets you judge us on performance rather than on a termination clause. Explore our fulfillment services.
Frequently asked questions
What should a 3PL contract include?
Service levels with remedies, a complete fee schedule, liability and insurance terms, data ownership, and clear term, renewal and exit conditions.
What is a good order accuracy SLA?
99.5% or higher is a common benchmark among established providers, ideally with a credit for each error and free reshipping of the correct item.
Can I negotiate a 3PL contract?
Yes. Liability caps, notice periods, minimums and contract length are frequently negotiable, especially if you can share reliable volume forecasts.
How long should a first 3PL contract be?
Shorter is safer. Month-to-month or a short initial term lets you test performance before committing for longer.
What is a lien clause in a 3PL contract?
A clause that lets the warehouse hold your inventory if invoices are unpaid. Check exactly when it applies and how disputes are handled before you sign.
Want terms you can check against real performance? Start with a no-lock-in quote and judge us on accuracy and dispatch times, not on a termination clause.
