Item based event error "The item and unit of measure combination isn't valid. (PJB-2190880)"

Summary:

when creating an Item based event I get an error "The item and unit of measure combination isn't valid. (PJB-2190880). What could be the problem?
Any help would be greatly appreciated!

1. Enabled Item Based Event Billing
2. Added contract line for Item, project
3. Created an Item for non-stock service item (INCSA) with primary UOM set as EACH. Assigned this to the contract line and selected UOM EACH.

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