Negotiators for Woodward & Lothrop and the retail clerks union have settled most of their differences and are on the verge of agreeing to a union contract for Woodies workers, source close to the labor talk reported yesterday.

Representatives of the department store chain and Local 400 of the Retail Store Employes Union have scheduled a special meeting for Sunday and expect to complete their negotiations then, both union and company sources said.

The two side plan "to use this as a ratification meeting," said one person involved in the prolonged negotiations.

Neither local 400 President Thomas McNutt nor Woodward & Lothrop Chairman Edwin K. Hoffman could be reached for comment yesterday.

Although they insisted critical differences have been resolved, sources on both sides refused to discuss terms of the agreement reached so far.

The most difficult issue in the negotiations have been union security. Local 400 demanded a union shop, in which all Woodies' workers would be forced to join the union.

The talks collapsed Oct. 31, after Woodies refused to bargain on the union shop issue, contending that Virginia's "right-to-work law" made a union shop illegal.

Hoffman noted that the chain routinely transfers workers between stores in the District of Columbia, Maryland and Virginia, making the union shop provision difficult to enforce. Union officials said other multistate unions have negotiated union shop agreements that do not apply to (TEXT OMITTED FROM SOURCE)

Union members voted unanimously to strike against Woodies on Nov. 4, but a day later a federal mediator entered the talks and negotiations resumed.

The negotiations, which began Aug. 8, are the first contract talks between Woodward & Lothrop and Local 400.

The union won the right to represent Woodies' employes by a 4-1 margin in a July election that was the largestunion organizing vote ever in the Washington area.