Legal Definitions - stock in trade

The term stock in trade refers to two primary categories of items crucial for a business or a professional trade:

• First, it describes the inventory of goods that a business holds specifically for sale to its customers in the normal course of its operations.
• Second, it encompasses the essential equipment, tools, materials, and supplies that a person or business requires to perform their work or deliver their services effectively.

Here are some examples to illustrate this concept:

• Example 1: A Local Bookstore

  For a local bookstore, its stock in trade primarily includes all the books, magazines, stationery, and greeting cards displayed on its shelves and in its storage room, waiting to be purchased by customers. These are the items the bookstore sells to generate revenue.

  This example illustrates the first meaning of "stock in trade," referring to the inventory held for direct sale to consumers.

• Example 2: A Mobile Auto Mechanic

  A mobile auto mechanic's stock in trade would include their specialized diagnostic tools, wrenches, jacks, spare parts like oil filters and spark plugs, and the service vehicle itself. These are the indispensable items and equipment the mechanic needs to perform repairs and maintenance services for clients at various locations.

  This example highlights the second meaning, where "stock in trade" refers to the essential tools and equipment necessary for a professional to carry out their trade or service.

• Example 3: A Custom Furniture Workshop

  For a custom furniture workshop, its stock in trade includes both the raw materials like various types of wood, veneers, hardware (hinges, handles), and finishes (stains, varnishes), as well as the specialized machinery such as saws, planers, sanders, and woodworking benches. While the finished furniture pieces are inventory for sale, the raw materials and tools are fundamental to creating those products.

  This example demonstrates how "stock in trade" can encompass both the materials used to create products and the equipment needed for their production, which are all vital for the business's operation.