The WhatsApp contract: Jaevee Homes Ltd v Fincham

Can you create a construction contract via Whatsapp?

When most parties think of entering into construction contracts, the JCT, NEC, FIDIC and RIBA contracts spring to mind, but not WhatsApp messenger. However, the recent case of Jaevee Homes Ltd v Fincham is proof that construction contracts can indeed be formed via WhatsApp.

Those involved in entering into construction contracts need to take care that informal communications on messaging platforms do not have unintended contractual consequences

Facts

Jaevee Homes Ltd (‘Jaevee’) entered into discussions with Mr Fincham (of Fincham) for demolition works in Norwich.

The discussions on the scope of works, fee and the payment structure commenced via email, after Fincham visited the demolition site in April 2023. The discussions then continued via Whatsapp between Mr Fincham and Mr James (of Jaevee).

On the 17^th May 2023, Mr Fincham enquired on whether he was being given the demolition works job via WhatsApp. He subsequently received confirmation from Mr James that:

• He had been given the demolition works job.
• Monthly applications for payment was agreed.
• Payments would be made 28 or 30 days from the issue of an invoice.
• The potential start date of the demolition works would be the following Monday (the ‘WhatsApp Contract’).

On the 26^th May 2023, Mr James followed up via email, sending Mr Fincham a suite of documents containing a purchase order and a sub-contract (the ‘Email Contract’), which provided a mechanism for monthly interim payments and stated the fee. Mr Fincham did not respond to this email. Fincham then went on to commence the demolition works.

The Dispute

Shortly after the demolition works started, Fincham issued four invoices totalling £195,857.50 plus VAT, within a period of seven weeks. Jaevee paid a total of £80,000 of the invoices.

Fincham subsequently commenced an adjudication for the remaining monies, on the basis that Jaevee did not issue a payless notice.

Jaevee argued  it was the Email Contract that governed the demolition works, alternatively, if it was the WhatsApp Contract that governed the works, payment applications should have been submitted once a month. Fincham, however, argued that the WhatsApp Contract governed the works and therefore, payment  should have be made 28 or 30 days after the issue of an invoice.

The adjudicator subsequently concluded that Jaevee were to pay Fincham approximately £145,896.31, which included the outstanding sum plus interest and late payment fixed compensation. Jaevee, however, refused to pay and issued a Part 8 claim on the basis that no payment was due.

Court Ruling

The Part 8 claim highlighted two issues:

1. When the parties had entered into contract and on what terms.
2. Whether the invoices issued were valid applications for payment.

The court held in Jaevee’s favour and ruled that the contract was entered into via Whatsapp. The judge held that the Whatsapp Contract, “whilst informal, evidenced and constituted a concluded contract”. 

Although the Whatsapp Contract did not set out the duration of the works and did not contain all the payment details that would more usually be included in construction contracts, it was still deemed to be a valid contract.

The court also held 3 out of 4 of the invoices to be valid. The invalid invoice was deemed so because it was the second invoice issued in a month, and Fincham was only entitled to issue one invoice per month.

Key Takeaways

• WhatsApp messages (and other informal modes of communication) can create formal contracts.
• A clear offer, acceptance, and intention to create legal relations will form a contract regardless of the mechanism or platform used.
• Payment terms not set out in the contract can be implied by statute via the Housing Grants, Construction and Regeneration Act 1996.
• The client should follow the payment mechanism in place and issue a payless notice on time, if needed.
• The contractor should follow the payment mechanism in place and issue one invoice per payment period.

Comment

The Jaevee Homes v Fincham decision reminds us that even relatively informal means of communication such as Whatsapp can lead to the creation of a legally binding contract.

If parties wish to discuss services or work informally, they should make it clear that the discussion is ‘subject to contract’ and that the terms will be finalised in a subsequent formal written contract.